Part 1 of this assignment requires you to apply one of the theories of motivation as younavigate the steps for Performance Management outlined in Kinicki and Fugate (2018). Effective performance manag
203 This chapter focuses on improving individual job performance, notably yours, as well as on your ability to improve the performance of others. To do this, you need to draw on and apply many of the concepts and tools you’ve learned thus far, such as hard and soft skills, personality, perceptions, and of course motivation. The integration and ap- plication of this knowledge for the purposes of improved outcomes is called perfor- mance management. Performance management (PM) is a set of processes and managerial behav - iors that include defining, monitoring, measuring, evaluating, and providing con- sequences for performance expectations. 4 Defined in this way, PM is far more than performance appraisal. Appraisals typically consist only of the actual performance review, an event. Effective PM, in contrast, is a continual process and a critically im - portant individual-level process. Performance management typically operates through an organization’s managers and human resources policies and practices. You will learn how it affects outcomes across all levels in the Organizing Framework, such as indi - vidual (job satisfaction, OCBs, and turnover), team (cohesiveness, conflict, and per - formance), and organizational (reputation, performance, survival, innovation, and employer of choice). Effective Performance Management As illustrated in Figure 6.2, effective PM has four steps:Step 1: Defining performance.
Step 2: Monitoring and evaluating performance.
Step 3: Reviewing performance.
Step 4: Providing consequences.
Successfully managing performance is a powerful means for improving individual, group/team, and organizational effectiveness. 5 Effective performance management influences important outcomes such as greater employee engagement and better MAJOR QUESTION What are the elements of effective performance management, and how can this knowledge benefit me?
THE BIGGER PICTURE Performance management occurs in many arenas of your life, notably school and work. Be - cause it is a process that generates grades at school and promotions and\� pay at work, it is important to understand how it works. You’ll learn why performance management is one of the most critical and far-reaching processes in the Organizing Framework\�. You’ll also see why opinions about the usefulness and effectiveness of performance managemen\�t practices are often negative. However, you’ll also learn how performance management practices can be beneficial, such as by helping signal and reinforce desired behaviors an\�d outcomes across all levels of OB. 6 .1 PERFORMANCE MANAGEMENT PROCESSES Performance Management CHAPTER 6 205 How Much Would You Pay Fannie and Freddie?
Fannie Mae and Freddie Mac are organizations at the heart of the US hous\�ing industry. They buy mortgages from lenders and either hold them or package and sell them to \�investors. They were cen- tral players in the financial crisis and were subsequently taken over (bailed out) by the government.
It has been a long road back, and Mel Watt, the regulator who oversees Fannie and Freddie, recom - mended that their CEOs each get raises of $3.4 million, taking the\�ir salaries from $600,000 to $4 million each. Watt argued that the increases were deserved and necessary. He said both CEOs have done a commendable job of turning their organizations around since the crisis. \�Some of these reasons were inspired by Timothy Mayopoulos, CEO of Fannie, when he expressed concerns about his present pay. Donald Layton, CEO of Freddie, is likely to retire in the near future, and Watt and other supporters claimed salaries of this level are necessary to attract quali\�fied candidates to replace him. In fact, other senior Fannie and Freddie executives are paid more than the current CEOs. 9 And earlier Fannie and Freddie CEOs earned $5.3 million and $3.8 million, respectively, as recently as 2011. 10 The proposed raises met with strong opposition. President Obama and Cong\�ress blocked them, arguing that CEOs of organizations under government control should not b\�e paid this much. Layton said in response, “I signed up for this job personally as a public service matter so \�compensation wasn’t the big attraction to me.” As to whether another qualified executive could be found at the lower pay level, Layton said, “I am of the belief there are other people like me who . . . would be willing to do a job as a public service matter.” 11 Problem-Solving Application What Goes Wrong with Performance Management Volumes of research and employee surveys report that the majority of managers and or - ganizations do a poor job of managing employee performance.
• Fewer than 40% of employees say their systems do not provide clear goals or gen- erate honest feedback. 12 • 66% of employees say it actually interferes with their productivity.
• 65% say their company’s practices are irrelevant to what they actually do in their jobs. 13 • 58% of 576 HR executives surveyed graded their company’s performance manage- ment systems as a C or worse. 14 These unfortunate perceptions raise the question: Why do companies often do so poorly with performance management? Apply the 3-Step Problem-Solving Approach Step 1: Define the problems confronting the regulator Mel Watt.
Step 2:
Identify the potential causes of these problems. Step 3: Make your recommendations.
Performance Management CHAPTER 6
