1. Performance Management 2nd Edition

2. Performance Management and Reward Systemsin Context

3. Overview • Definition of Performance Management (PM) • The Performance Management Contribution • Disadvantages/Dangers of Poorly Implemented PM Systems • Definition of Reward Systems • Aims and Role of PM Systems • Characteristics of an Ideal PM System • Integration with Other Human Resources and Development Activities

4. Definition of Performance Management (PM)

5. Definition of PM • Continuous Process of • Identifying • Measuring • Developing The performance of individuals and teams

6. Definition of PM (continued) and • Aligning performance with Strategic Goals of the organization

7. Performance Management is NOT performance appraisal

8. PM is NOT performance appraisal • Performance Management • Strategic business considerations • Driven by line manager • Ongoing feedback • So employee can improve performance

9. PM is NOT performance appraisal • Performance Appraisal • Driven by HR • Assesses employee • Strengths & • Weaknesses • Once a year • Lacks ongoing feedback

10. Contributions of Performance Management

11. Contributions of Performance ManagementFor Employees • Clarify definitions of • job • success criteria • Increase motivation to perform • Increase self-esteem • Enhance self-insight and development

12. Contributions of Performance Management For Managers • Communicate supervisors’ views of performance more clearly • Managers gain insight about subordinates • Better and more timely differentiation between good and poor performers • Employees become more competent

13. Contributions of Performance ManagementFor Organization/HR Function • Clarify organizational goals • Facilitate organizational change • Fairer, more appropriate administrative actions • Better protection from lawsuits

14. Disadvantages/Dangers of Poorly-implemented PM Systems

15. Disadvantages/Dangers of Poorly-implemented PM SystemsFor Employees • Lowered self-esteem • Employee burnout and job dissatisfaction • Damaged relationships • Use of false or misleading information

16. Disadvantages/Dangers of Poorly-implemented PM SystemsFor Managers • Increased turnover • Decreased motivation to perform • Unjustified demands on managers’ resources • Varying and unfair standards and ratings

17. Disadvantages/Dangers of Poorly-implemented PM SystemsFor Organization • Wasted time and money • Unclear ratings system • Emerging biases • Increased risk of litigation

18. Reward Systems

19. Reward SystemsDefinition Set of mechanisms for distributing • Tangible returns and • Intangible or relational returns As part of an employment relationship

20. Reward SystemsTangible returns • Cash compensation • Base pay • Cost-of-Living & Contingent Pay • Incentives (short- and long-term)

21. Reward Systems Tangible returns (continued) • Benefits, such as • Income Protection • Allowances • Work/life focus

22. Reward SystemsIntangible returns • Relational returns, such as • Recognition and status • Employment security • Challenging work • Learning opportunities

23. Returns and Their Degrees of Dependencyon the Performance Management System

24. Returns with Low Dependencyon the Performance Management System • Cost of Living Adjustment • Income Protection

25. Returns with Moderate Dependencyon the Performance Management System • Work/Life Focus • Allowances • Relational Returns • Base Pay

26. Returns with High Dependencyon the Performance Management System • Contingent Pay • Short-term Incentives • Long-term Incentives

27. Purposes of PM Systems

28. Purposes of PM Systems: Overview • Strategic • Administrative • Informational • Developmental • Organizational maintenance • Documentational

29. Strategic Purpose • Link individual goals with organization’s goals • Communicate most crucial business strategic initiatives

30. Administrative Purpose • Provide information for making decisions re: • Salary adjustments • Promotions • Retention or termination • Recognition of individual performance • Layoffs

31. Informational Purpose Communicate to Employees: • Expectations • What is important • How they are doing • How to improve

32. Developmental Purpose • Performance feedback/coaching • Identification of individual strengths and weaknesses • Causes of performance deficiencies • Tailor development of individual career path

33. Organizational Maintenance Purpose • Plan effective workforce • Assess future training needs • Evaluate performance at organizational level • Evaluate effectiveness of HR interventions

34. Documentational Purpose • Validate selection instruments • Document administrative decisions • Help meet legal requirements

35. An Ideal PM System: 14 Characteristics • Congruent with organizational strategy • Thorough • Practical • Meaningful • Specific • Identifies effective/ ineffective performance • Reliable

36. An Ideal PM System: 14 Characteristics (continued) • Valid • Acceptable and Fair • Inclusive • Open (No Secrets) • Correctable • Standardized • Ethical

37. Congruent with organizational strategy • Consistent with organization’s strategy • Aligned with unit and organizational goals

38. Thorough • All employees are evaluated • All major job responsibilities are evaluated • Evaluations cover performance for entire review period • Feedback is given on both positive and negative performance

39. Practical • Available • Easy to use • Acceptable to decision makers • Benefits outweigh costs

40. Meaningful • Standards are important and relevant • System measures ONLY what employee can control • Results have consequences • Evaluations occur regularly and at appropriate times • System provides for continuing skill development of evaluators

41. Specific Concrete and detailed guidance to employees • What’s expected • How to meet the expectations

42. Identifies effective and ineffective performance • Distinguish between effective and ineffective • Behaviors • Results • Provide ability to identify employees with various levels of performance

43. Reliable • Consistent • Free of error • Inter-rater reliability

44. Valid • Relevant (measures what is important) • Not deficient (doesn’t measure unimportant facets of job) • Not contaminated (only measures what the employee can control)

45. Acceptable and Fair • Perception of Distributive Justice • Work performed  Evaluation received  Reward • Perception of Procedural Justice • Fairness of procedures used to: • Determine ratings • Link ratings to rewards

46. Inclusive • Represents concerns of all involved • When system is created, employees should help with deciding • What should be measured • How it should be measured • Employee should provide input on performance prior to evaluation meeting

47. Open (No Secrets) • Frequent, ongoing evaluations and feedback • 2-way communications in appraisal meeting • Clear standards, ongoing communication • Communications are factual, open, honest

48. Correctable • Recognizes that human judgment is fallible • Appeals process provided

49. Standardized • Ongoing training of managers to provide • Consistent evaluations across • People • Time

50. Ethical • Supervisor suppresses self-interest • Supervisor rates only where she has sufficient information about the performance dimension • Supervisor respects employee privacy