Performance Management: Performance Management Professor Lucia Miree American University in Bulgaria


Performance Management: 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: Performance Management Organizational system Focusing on employee performance Consistently applied throughout organization With a supporting structure


Names of Systems: Names of Systems Performance Management Performance Appraisals Evaluation Systems Job Review Systems Feedback Systems


Performance Management: Performance Management Ensuring appropriate performance by all employees through: -Reinforcement -Rewards -Modeling -Coaching -Training -Development Using a consistent feedback system


Working of Performance Management: Working of Performance Management


Examples of System Output: 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: PERFORMANCE = Doing present job at a certain level (high or low) as measured by a formal system POTENTIAL = Includes future service, learning interest, motivation level


PROBLEM =: PROBLEM = Deviation from expectations Do something in different way Not do something Do something not expected/needed


Opportunity: Opportunity


PERFORMANCE MANAGEMENT: 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: Performance Management Trends 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: 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: Associated Costs Staff Costs Production and Processing Costs Training Costs Action Costs Opportunity Costs


Key PM Questions: 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: 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: WHAT to Assess Skills/Abilities/Needs/Traits of Individuals That Interact with the Organization to Produce Behaviors Which Result in Outcomes


Measures Focus: Measures Focus Consistent indicators across industry or similar organizations Comparison of indicators over time in organization Comparisons with pre-determined standard


Approaches to PM: Approaches to PM Comparative Attribute Behavioral


HOW to Assess Performance: HOW to Assess Performance Traditional Management-by-Objective Assessment Center Peer Review Panel Critical Events Upward Feedback 360 Degree


Techniques of PM: 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: 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: Morgan Stanley’s Essay System Consider objectives identified in prior year’s Summary as well as this year’s objectives. Evaluation: Strengths Comments 1. 2. 3. Development Areas Comments 1. 2. 3.


Examples of essays on PMs….: 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….: 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: Management-by-Objective Examples 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: Ranking Example Manager ranks all employees from best to worst: Overall performance On specific criteria (communication, customer relations skills, etc.)


Paired Comparisons Example: 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: 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: General Electric’s Distribution The Vitality Curve Promotability High Medium Limited Top Performers 10% Highly Valued 70% Least Effective 20%


Ratings Example: Checklists: 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: 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 Performance Scorecard: Citibank’s Performance Scorecard


Citibank’s Performance Scorecard..: Citibank’s Performance Scorecard..


Citibank’s Link to Compensation: Citibank’s Link to Compensation Ratings Bonus “Above Par” 30% “Par” 15% “Below Par” 0%


Microsoft’s PA System: 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: 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: Ratings Example: BARS Indicate the appropriate level of performance on each factor: Quantity of work Quality of work Judgment Volume low & erratic Satisfactory steady volume Volume above expectations Results always accurate; model work Results accurate and thorough Results generally inaccurate and not thorough Systematic, analytical, good with complex problems Practical judgment, solves problems, difficulty with assessing relative value of factors Does not always show good judgment; problem analysis not always adequate


Microsoft Competency Toolkit: Microsoft Competency Toolkit FACTOR: Individual Excellence COMPETENCY: Intellectual Horsepower (is bright, intellectual sharp, learns quickly)


Microsoft Competency Toolkit: 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: 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: Criteria for Performance Measures Relevant Reliable Discriminating Practical


Problems with Performance Measures: Problems with Performance Measures Controllability Motivational impact “Fallout” Role Modeling Impact Reliability Relevance Control


WHO Should Assess Performance: WHO Should Assess Performance Superior Only Subordinate(s) Peers/Coworkers Self Customers Others Subordinates All Stakeholders


WHEN to Assess Performance: 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: How to Communicate PM Info Orally In Writing Formally Informally Public Private Moderated


Handling Performance Issues: Handling Performance Issues What to do Where to start How to do it


PROBLEM =: PROBLEM = Deviation from expectations Do something differently Not do something Do something not expected/needed


Performance Problems: Performance Problems


PROBLEM ID: PROBLEM ID PRELIMINARY SCAN What shouldn’t be happening? Impact of this? Worth pursuing? ORGANIZATIONAL SCAN Match strategic plan? Critical functions missing? Culture and performance gaps? FUNCTIONAL JOB ANALYSIS Specific job deficiencies? Job knowledge and training?


CAUSAL ANALYSIS: CAUSAL ANALYSIS ID: When problem began What else has changed PARETO’S LAW: Rule of 20/80 “80% of any problem is caused by 20% of possible causes.”


CAUSES OFPERFORMANCE PROBLEMS: CAUSES OF PERFORMANCE PROBLEMS


PERFORMANCEOPPORTUNITIES: PERFORMANCE OPPORTUNITIES No/Low Knowledge High Knowledge


PERFORMANCEOPPORTUNITIES: PERFORMANCE OPPORTUNITIES No/Low Knowledge High Knowledge


ALTERNATIVE SOLUTIONS: ALTERNATIVE SOLUTIONS Return to old system Fire, transfer, hire new Train Reassign or isolate RATE EACH BY: -Contribution to Objectives (high, medium, low) -Cost to fix and to ignore (high, medium, low) RANK IN ORDER


Training & Development: Training & Development


T & D TRENDS: T & D TRENDS Skill requirements change with more work complexity Workers more educated Workers more diverse Org restructuring continues Training often outsourced More technology use in Training Training Departments = Brokers J-I-T and J-W-I-N Training Grow Increase on human performance


Factors Influencing T & D: Top management support Commitments from Specialists and Generalists Technological Advances Organizational Complexity Behavioral Science Knowledge Learning Principles Performance of Other Human Resource Functions Factors Influencing T & D


TRAINING & DEVELOPMENT METHODS: TRAINING & DEVELOPMENT METHODS Coaching Mentoring Business Games Case Studies Role Playing Videotapes In-Basket Training Internships Job Rotation Computer-based


Methods (continued): Methods (continued) Cyberlearning: -Internet/Intranet -Virtual Reality -Distance Learning -Video Conferencing Classroom Programs Corporate Universities Colleges & Universities On-the-Job Training Apprenticeship Training Simulators Vestibule Training


DEVELOPMENT: DEVELOPMENT HARDWARE -equipment -space -money -people -transportation 2. SOFTWARE -policies & procedures -reward systems -communication systems -structure BEHAVIORAL -supervision -peer relationships -values & attitudes -personality -individual goals & priorities


EMPLOYEES PERFORMANCE :CATEGORIES AND STRATEGIES: EMPLOYEES PERFORMANCE : CATEGORIES AND STRATEGIES DEADWOOD: No training; demotions or removal; remedial work; training to prevent loss; orientation to lower job; divest WORKHORSES: Training stressing improvement, orientation or maintaining skills; career counseling on limits PROBLEM CHILDREN: Remedial, therapeutic or corrective dev plan; divest STARS: Special effort, programs and funds to maximize value; invest


IMPLEMENTATION PLAN: IMPLEMENTATION PLAN Priorities Options Budget Development Selection of Methods Plan with Benchmarks Pilot Program Evaluation Adjustments and New Plan Full Implementation On-Going & Periodic Evaluations (Is it working? If no, why not?)


Why PM Is Difficult: Why PM Is Difficult Job/Outcomes not quantified Personal relationships with employees Unable to give criticism Personality biases Poor communication Conflicting Goals Playing God


Errors in Performance Measurement: Errors in Performance Measurement Strictness or Leniency Central Tendency Halo Error Recency Error Supervisor Bias Overall Ratings


Correcting PM Errors: Correcting PM Errors Isolate Job Areas Observe Regularly Minimize Number of Ratings Completed Train Raters Define Dimensions Better Give Feedback Use Continual Feedback Include Other Sources Decrease Generalities, Include Specifics


Effective PM Systems: Effective PM Systems System acceptable to employees Managers use system regularly & correctly Perception of being treated fairly by system Useful feedback provided Focus on problem solving, not blame Serve to increase productivity & satisfaction System used by organization


Training for PM Interviews: Training for PM Interviews Have documentation Be objective judge job, not individual Use specific examples Share control Make it a year-round process


Training….continued: Training….continued Solicit & give feedback -Clear -Constructive -Descriptive, not judgmental Avoid arguments Strive for consistency Get it down in black and white By-the-book Listen


PRIOR TO PM INTERVIEW: PRIOR TO PM INTERVIEW Decide on best time Decide on best place Prepare facilities Gather info and materials Prepare employee Plan the opening Plan the approach Plan the conclusion


After PM Interview: After PM Interview Meet deadlines Solicit input Reinforce, reward, punish (follow through) Review regularly


How to Destroy PM System: How to Destroy PM System Do not follow policies Be inconsistent in application Treat it as unimportant Do not follow-up Reprimand in public; Reward in private Conduct when angry Be late


The WHY of Performance Management Systems: 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