Masters level forum There are many different approaches to performance management. Although one would like to assume that there is a "best way", the organization needs to evaluate the cost and benefi
Introduction
Topics to be covered:
Employee behavior and performance on the job
Performance management
Appraisal systems
When individuals become employees for an organization, that organization has expectations for how those employees should behave and perform on the job. To establish standards for behavior and hold employees accountable to those standards, organizations usually have a system of performance management. An important part of this system is a process that evaluates and appraises employee behavior and performance. This lesson will review some of the reasons that employees behave in certain ways and discuss how performance management and appraisal systems can be used to encourage employees to meet organization’s expectations for employee behavior and performance.
Employee Behavior and Performance on the Job
Employees do not always behave as expected. Some of the common issues that organizations may experience with employees include chronic tardiness, conducting personal business at work, drug and alcohol abuse, non-performance or underperformance of assigned work tasks, ethical lapses, harassment of others, conflicts with co-workers, and undesirable personal conduct such as the use of swear words in conversation.
Organizations must manage such issues to ensure that they do not become problems in the workplace, and this is often the responsibility of HRM professionals. To do this, it is beneficial to understand why employees sometimes behave in undesirable ways. This understanding can begin by reviewing the total person concept, which is the idea that when an organization hires an individual, they are hiring the total person—all of his or her personal characteristics—not just his or her job skills. The total person concept also emphasizes that human traits such as physical fitness, self-concept, emotional control, self-awareness, and values orientation are interdependent, with each trait interacting with the other traits to create the total person and shape an individual’s behavior. According to the concept of the Wheel of Life, each individual experiences six areas of life that, when put together, comprise the total person. These areas include the following (Reece, 2012):
Family and home
Financial and career
Physical and health
Spiritual and ethical
Mental and educational
Social and cultural
To achieve success in life, individuals must be aware of each of these areas and how they affect life and personal behavior. Each person must realize that he or she cannot devote equal time to every part of life. Likewise, organizations must understand that when they hire an individual, he or she has obligations in each area of life. To be successful, each employee must balance these areas in a way that ensures each one receives sufficient attention.
Improving the Total Person
Successful organizations recognize that if the total person can be improved, the organization experiences significant benefits. To promote good health and satisfaction among their employees, some organizations strive to design organizational cultures that support employees in their efforts to balance and achieve success in each area of life. To do that, organization must be aware that employees generally are affected by six major forces that influence their behavior and determine how they will behave in the workplace. According to Schermerhorn, Hunt and Osborn (2005), these forces include the following: abilities, gender, race and culture, attribution, perception and attitude.
Abilities are our capabilities and talents, both natural and learned, which enable individuals to successfully perform specific tasks. Individuals have abilities in the following three categories.
Intellectual abilities refer to an individual’s intelligence and memory as well as his or her verbal and analytical skills.
Physical abilities are an individual’s physical strength, stamina, and motor skills.
Self-awareness abilities refer to an individual’s conscious knowledge of his or her personality, including strengths, weaknesses, and other character traits.
Gender refers to whether an individual identifies as a male or female.
Race and culture refer to the group(s) that an individual identifies with based on common ancestry, shared physical traits, shared history, and other commonalities such as religious affiliation.
Attribution is the process that an individual uses to understand things by determining who or what caused those things to happen.
Perception is the process that individuals use to receive, organize, and analyze information and convert it into useful material.
Attitude refers to an individual’s tendency to respond positively or negatively to people or things based on his or her values, beliefs, opinions, and other information that they possess.
Every behavior that an individual demonstrates is influenced by one or more of these six factors. For example, men and women behave differently, making gender a factor that influences behavior. People from different races and cultures tend to have different opinions about things, making race and culture a factor that determines how someone will behave. Attitudes, perceptions, and attributions all affect what people think and how they will behave. Different people have different abilities, and this influences behavior.
To be successful, individuals need to understand these six factors and how each one affects behavior. Likewise, in organizations, HRM professionals and other managers need to be aware of these six factors and recognize that each employee behaves the way he or she does because of the way these factors influence him or her. These factors should be considered in all aspects of the workplace, including the development of organizational cultures and job design. These factors also should be a consideration during performance management and employee appraisals.
Performance Management
Understanding employee behavior is an important part of performance management, which refers to a process used by HRM professionals and other organization managers to establish standards and motivate employee performance by monitoring employee activities and providing constant feedback on how well each employee is performing his or her job, enabling an organization to achieve its overall goals and objectives. As part of this process, underperforming employees are given the resources they may need, such as training, to enable them to improve their job performance. Watch this short video for an excellent way to address poor performance: Coaching Poor Performance
According to Cascio (2010), those involved in a performance management system should be able to handle the following three processes: define, facilitate, and encourage performance.
Define Performance
As it applies to the workplace, performance refers to the actions that an employee takes to complete tasks and achieve the work assigned to his or her job. In a performance management system, according to Cascio (2010), the concept of performance definition represents a process that requires HRM professionals and other managers to fully explain and define what an employee is supposed to do on the job. This helps ensure that each employee understands the expectations that an organization has for him or her and the things that he or she must do to meet these expectations. With this understanding, each employee focuses on doing his or her part to achieve the organization’s goals and objectives, and each employee respects the need to have his or her performance measured and assessed to determine if changes are needed. Knowing that his or her performance will be appraised motivates employees to perform as effectively as possible when they do their work.
Facilitate Performance
Cascio (2010) argues that the concept of performance facilitation represents a process whereby HRM professionals and other managers select employees who have the knowledge and skills necessary to successfully do a job, provide those employees with adequate resources needed to get a job done, and remove any obstacles that might prevent those employees from performing their work as optimally as possible.
Encourage Performance
According to Cascio (2010), the concept of performance encouragement represents a process whereby HRM professionals and other managers recognize and reward employees who perform their jobs well and meet an organization’s expectations. For this process to be effective, Cascio (2010) suggested that performance encouragement must meet the following criteria.
The rewards must be things that have great value to employees, and employees should receive a sufficient amount of these rewards to make them feel their performance was adequately rewarded.
The rewards must be provided to employees in a timely manner following performance that deserves recognition and rewards.
The rewards must be distributed among employees in a way that is perceived as fair and just by all employees. To promote fairness, Cascio (2010) recommends that HRM professionals and other managers involved in this process should use voice, consistency, relevance and communication to guide their practices.
Voice refers to the process of allowing employees to provide input about the rewards that have value to them and how they want to receive such rewards.
Consistency is the process of treating all employees in a like manner as they are allowed to have input into the process and as they are evaluated and given rewards.
Relevance refers to whether the rewards have value and significance to employees. If the rewards are not relevant, they are not worthwhile.
Communication is the process of specifically and thoroughly explaining the rationales and rules pertaining to the appraisal and reward process.
Suggested Activities for an Effective Performance Management System
According to Banfield and Kay (2008), an effective performance management system will include the following activities, which should be completed by HRM professionals and others involved in the process:
Establish the organization’s overall goals and objectives, with long-term strategies for achieving these.
Define the key measures of success that will be used to determine if the organization has met its goals and objectives.
Establish the departmental, team, and individual employee goals and objectives that should be met to enable the organization to achieve its overall goals and objectives.
Define the key measures of success that will be used to determine if departments, teams, and individual employees have achieved their goals and objectives.
Evaluate effectiveness by appraising how well the organization, each department, each team, and each employee has performed and whether goals and objectives have been achieved.
Required Terms for Performance Management
To successfully practice performance management, Banfield and Kay (2008) argue that HRM professionals and others involved in the process must understand the following terms:
Productivity refers to the ratio of inputs to outputs. At the employee level, this refers to the inputs that were required from each employee to produce specific outputs. At the organization level, this refers to the overall inputs expended by the organization as a whole to produce the organization’s overall outputs.
Effectiveness refers to the relationship between objectives and outcomes, and whether goals were successfully achieved.
Effort refers to the amount of resources and the intensity of work that must be expended to achieve desired outcomes.
Effort bargain refers to how much work employees must do, and the intensity of work required, to receive rewards and recognition.
Discretionary effort refers to the idea that employees do not work at full capacity and that management has no control over whether they will decide to expend higher levels of effort.
Contribution refers to extra effort that employees put forth in addition to the efforts expected of them as per their job descriptions.
HRM professionals and other managers involved in performance management must use the information presented thus far in this lesson to inform the performance appraisal process, which is one of the most critical activities in performance management.
Appraisal Systems
To ensure that employees do the work that is expected of them, managers must periodically evaluate employees’ job performance. As stated above, this is a critical part of a performance management system. A performance appraisal
“is a process of systematically evaluating performance and providing feedback on which performance adjustments can be made” (Schermerhorn, Hunt, & Osborn, 2005, p. 168).
Performance appraisals generally serve the following purposes:
Define specific criteria and provide benchmarks against which an employee’s job performance can be measured. A benchmark can be defined as a standard or measure that is used as a reference point for judging and evaluating an employee’s performance and the quality of his or her work.
Provide a means for measuring past job performance and comparing it to current and future job performance.
Identify areas of concern where employees need motivation or other assistance, such as training and resources, to improve their job performance.
Distinguish excellent, average, and substandard job performance, thereby justifying feedback, including rewards and punishments, that are given to employees based on their job performance.
Performance Appraisal as a Decision Making Tool
Performance appraisals assist HRM professionals and managers as they make two types of decisions — evaluative and development. The information gained from performance appraisals provides justification for decisions and actions in both of these areas:
Evaluative decisions are concerned with issues such as salary increases, transfers, promotions, and terminations.
Development decisions are concerned with how well employees meet the organization’s expectations. Performance appraisals help managers identify employees’ strengths as well as their weaknesses. This indicates areas where employees may need more development, such as training or other assistance, to enable them to do a better job. It also may indicate areas where employees need more and/or different motivation to encourage them to do a job appropriately.
Two Approaches
When conducting performance appraisals, managers have different options for how to approach the process. Schermerhorn, Hunt and Osborn (2005) identified two categories of performance appraisals—comparative methods and absolute methods.
Absolute methods – Measure employees against established standards or benchmarks to determine whether they are doing a satisfactory job.
Comparative methods – Strive to compare employees to each other, determining which employees are doing a better job compared to other employees.
Since the employees are compared to each other, rather than measured against standards, comparative methods do not necessarily indicate whether employees are doing a satisfactory job. If every employee is performing poorly, comparative methods of performance appraisals will simply indicate which employees are performing less poorly than others.
Absolute Methods of Performance Appraisals
Schermerhorn, Hunt, and Oborn (2005) describe four absolute methods: management by objective (MB0), critical incident diaries, behaviorally anchored rating scales (BARS) and graphic rating scales.
Management by Objectives (MBO)
When management by objectives (MBO) is used as part of the performance review process, employees and managers work together to establish task-related goals and objectives that each employee is expected to achieve within a given time period. The performance appraisal is used to determine whether each employee met expectations.
Critical Incident Diaries
When using a critical incident diary, managers maintain a diary on a daily or weekly basis, in which they record information about incidents that indicate each employee’s success or failure on the job. Since this information might be qualitative, as opposed to quantitative, it may be insufficient for making evaluative decisions regarding an employee’s performance. As such, critical incident diaries are often paired with some other type of performance appraisal approach that is based on quantitative data.
Behaviorally Anchored Rating Scale (BARS)
Behaviorally anchored rating scale (BARS) lists descriptions of observable job behaviors, such as whether an employee is generally on time or tardy for work. For each behavior, this type of performance appraisal uses a scale to evaluate whether the employee’s performance was good or bad
Graphic Rating Scale
Graphic rating scale lists dimensions of a job — such as work quantity, work quality, and cooperation — and rates each employee on a scale that indicates whether his or her performance on each dimension was below average, average, or above average.
Comparative Methods of Performance Appraisals
Schermerhorn, Hunt and Oborn (2005) identified some comparative methods of performance appraisals: ranking, paired comparison and forced distribution.
Ranking lists dimensions of performance on the job, such as work quality, and ranks all employees being evaluated from best to worst on each dimension. For example, when considering work quality, employee C may be considered the best while employee E was second best, with employee A ranked as third best and so on.
Paired comparison uses pairs to compare each employee in a group to every other employee in a group. For each paired comparison, the manager determines which employee is better. For example, assume that a group has four employees. Employee A will be compared to employees B, C, and D, and the manager will determine, for each comparison, whether employee A performs better or worse than the co-worker being compared. Then employee B will be compared to employees C and D, and again, the manager will determine, for each comparison, which employee performs better. This process will continue until each employee has been compared to all other employees in the group and the manager determines who is the best employee overall and who is the worst.
Forced distribution uses categories such as excellent, good, average, below average, and poor. Managers are required, or forced, to rate a certain percentage of employees in each category. For example, managers may rate 10 percent of the employees as excellent, 20 percent as good, 40 percent as average, 20 percent as below average, and 10 percent as poor. If you had a group of 100 excellent employees, you would be forced to assign 10 to the poor category.
360-degree Evaluation
In addition to the above approaches to performance appraisals, HRM professionals and other managers may find it more appropriate to consider a variety of sources to gather feedback about employees’ work. One approach to accomplish this is the 360-degree evaluation, which gathers ratings about an employee’s work from the employee’s co-workers, subordinates, and customers, as well as supervisors and peers from outside the organization. In addition, this approach to performance appraisals requires the employee to perform a self-rating (Schermerhorn, Hunt, & Osborn, 2005, p. 169).
Avoiding Measurement Errors
Regardless of which method of performance appraisal they use, HRM professionals and managers must take care to avoid measurement errors. As Schermerhorn, Hunt and Osborn (2005, p. 175) explain, performance appraisal methods must be reliable, which means they must provide consistent results every time they are used, and they must be valid, which means they must actually measure employees’ on job performance aspects that are relevant to their work. The following are some of the more common measurement errors that are likely to occur during performance appraisals.
Halo errors occur when an employee is rated in a similar manner on each criteria.
Leniency error occur when high ratings are given to almost all employees regardless of their actual performance.
Strictness error occur when low ratings are given to almost all employees regardless of their actual performance.
Central tendency error occur when average ratings are given to almost all employees regardless of their actual performance.
Low-differentiation error is seen when raters use only a small part of the rating scale.
Recency error happen when only the employee’s most recent behavior is considered for a performance appraisal that is supposed to cover a longer period of time.
Personal bias error occur when raters allow personal biases, such as negative feelings toward specific groups of people, to affect the ratings they provide.
Performance appraisals are a critical part of a performance management system, and they have legal ramifications as they can be used to demonstrate an organization’s compliance with legal requirements pertaining to employment discrimination and other issues. HRM professionals and others involved in these processes must ensure that they have a thorough understanding of performance management, performance appraisals, and related processes, and they must know how to use them.
Conclusion
Performance management and appraisals are important activities in organizations. If used appropriately, they can be tools to encourage and motivate employees, helping them do their best work possible. When this happens and each employee achieves the goals and objectives established for his or her position, it enables an organization to achieve its overall goals and objectives. Well-designed performance management and appraisal systems that are handled appropriately by HRM professionals and other managers can be vital tools to help an organization succeed.
