Q1 -Hi Can you write 3 things or more you learned about this chapter

Chapter9

Learning Objectives

After reading and studying this chapter, you should be able to do the following:

• 9.1 Differentiate between performance management and performance appraisals.
• 9.2 Compare the design features of different types of appraisals with respect to their benefits and downsides.
• 9.3 Identify best practices for making performance reviews fair and unbiased.
• 9.4 Explain how to implement performance management for maximum effectiveness.
• 9.5 Describe how teaching managers how to be good coaches helps improve performance management.

What Is Performance Management?

Performance management is the process of measuring, communicating, and managing employee performance in the workplace so that performance is aligned with organizational strategy. If we unpack this definition, it will be easier to see the critical components of a performance management system. First, performance management involves obtaining some form of measurement of employee performance, or performance appraisal. Performance appraisals may take a number of different forms, ranging from subjective assessments in which managers evaluate employee performance to quantitative metrics resulting from employee actions such as sales performance, accounts opened, and the time in which a transaction is completed. There are many uses for this information, ranging from distributing rewards to identifying high-potential employees, determining training needs, and terminating employees to validating selection systems. Second, performance management systems involve giving feedback to employees regarding where they stand. This is important to motivate employees, ensure that their behaviors are aligned with the organization’s goals, and address performance gaps. Third, the ultimate goal behind performance measurement systems is the management of performance. When successful, performance management systems help with employee engagement, retention, and the achievement of organizational objectives.

One reason for conducting a formal performance assessment is to communicate to employees where they stand in the eyes of organizational decision makers. Individuals have their blind spots when it comes to their own performance. Knowing how they are perceived by managers, coworkers, or customers is useful for employees to develop their skills and find out through formal channels where they stand. The formal measurement of performance occurs annually, semiannually, or quarterly. Even if it happens several times a year, the formal performance review session has limitations as a medium for performance feedback. Because timeliness of feedback is so important,

Development and Problem Solving

Knowing where one stands with respect to performance criteria is a crucial step before taking corrective actions. An important objective of performance reviews is to identify employee strengths and deficiencies and develop ways to improve performance. This may take the form of employee training, providing additional coaching, taking corrective action in the form of putting the employee in a performance improvement plan, and supporting the employee in efforts to improve their performance. In other words, a key reason for conducting performance reviews is to take steps to improve future performance of the employee.

Decision Making

Organizations may want to make certain decisions using the performance metrics available to them. For example, reinforcement theory of motivation suggests that behaviors that are rewarded are more likely to be repeated.⁵ When individual pay, incentives, and bonuses reflect employee contributions and performance, employees are likely to find the reward systems to be more equitable. In addition to providing data to be used in compensation-related decisions, the organization may use performance data to decide who is next in line for managerial positions as well as to identify employees who are not meeting the expectations of their jobs. Performance metrics provide input to numerous talent decisions organizations make.

Data Analytics

The ability of a firm to harness the power of data analytics depends on the availability of high-quality data on critical outcomes of interest. Performance is one such outcome that companies are interested in predicting and managing. For example, companies may use performance ratings to decide whether the employee selection methods in place are valid.

Perceived Fairness

The usefulness of a performance appraisal system as a tool in performance management depends on the degree to which it is perceived as fair. If employees do not perceive their rating and the system producing their rating to be fair or feel that they do not receive feedback they consider to be fair, they are unlikely to be motivated to improve their performance. Therefore, fairness is a key criterion to determine the effectiveness of a performance appraisal system

Accuracy

Accuracy is a challenging goal to strive toward in performance ratings because it is difficult to measure. Outside of laboratory settings, it is often impossible to know whether performance ratings of managers are accurate, given that “true scores” are not known. Nevertheless, accurate measurement is a good goal to strive toward. Measures perceived as inaccurate are likely to be perceived as unfair.¹³ Further, basing organizational decisions on inaccurate measures will be problematic. Accuracy has a lot to do with reliability and validity of ratings. As a reminder

Practicality

An important aspect of an effective performance management system is its practicality. When the users of the system find it too time consuming and burdensome, they are more likely to regard it as paperwork pushed on them by HR departments, and their motivation to embrace the system will be low. As a result, perceived practicality will affect how motivated managers are to rate employees accurately and how engaged employees and managers are with the system

Perceived Fairness

The usefulness of a performance appraisal system as a tool in performance management depends on the degree to which it is perceived as fair. If employees do not perceive their rating and the system producing their rating to be fair or feel that they do not receive feedback they consider to be fair, they are unlikely to be motivated to improve their performance. Therefore, fairness is a key criterion to determine the effectiveness of a performance appraisal system

Accuracy

Accuracy is a challenging goal to strive toward in performance ratings because it is difficult to measure. Outside of laboratory settings, it is often impossible to know whether performance ratings of managers are accurate, given that “true scores” are not known. Nevertheless, accurate measurement is a good goal to strive toward. Measures

Practicality

An important aspect of an effective performance management system is its practicality. When the users of the system find it too time consuming and burdensome, they are more likely to regard it as paperwork pushed on them by HR departments, and their motivation to embrace the system will be low. As a result, perceived practicality will affect how motivated managers are to rate employees accurately and how engaged employees and managers are with the syste

Training Managers and Employees

Even though performance management is a key part of managers’ roles, skills involved in effective performance management are often lacking. For example, a study by an HR consulting firm on 223 companies around the world revealed that only 45% of participants believed that managers had the skills to build actionable development plans, and 44% had the skills to provide high-quality feedback and coaching. These gaps point to important development opportunities for managers, given their critical role in the effectiveness of performance management system

Increasing Rater Accountability

One assumption regarding performance appraisals is that keeping raters accountable for their ratings yields more accurate measurement. There is actually little research and empirical support for this argument. In fact, when raters are accountable to ratees (or when they know that they will have to explain their ratings to the employee they are rating), they are more lenient.⁵⁵ Raters may also be accountable to their own superiors, but research shows no effects of this type of accountability on performance ratings

Having Raters Keep Records of Employee Performance

Rating performance periodically, even when it occurs regularly and frequently, such as on a quarterly basis, will require the rater to recall past performance for each employee reporting to them. As a result, raters would benefit from help in recalling performance information. Diary keeping, or keeping records of employee performance, is a method that has been shown to improve rating accuracy by enabling raters to recall specific information about their employees. Keeping a log of critical performance incidents could be helpful, even though managers may find it cumbersome. This method allows the manager to remember and recognize important milestones and provide feedback rich in detai

Auditing the System

One of the best practices of performance management is to periodically audit the system. An audit might reveal if raters are serious about evaluations, whether employees are satisfied with the quality of the feedback, and if they feel that their efforts are fairly rewarded and recognized. Performance reviews may not always work the way they were intended. For example, the system may have low user acceptance. Managers’ lack of skills in confronting performance problems may lead to unproductive conversations. In some instances, the performance review criteria may become outdated as jobs change and evolve. Auditing the system periodically will help uncover and address these and other problems. As a case in point, Facebook has a team of analysts that go through reviews to identify potential evidence of bias. For example, they examine whether managers describe their male and female subordinates using similar language—the more frequent use of the word abrasive to describe female employees may capture unconscious biases, which may be worth further investigation to ensure that performance reviews and the resulting compensation are not biased

Teaching Managers How to Be Good Coaches and Build Trust

LO 9.5 Describe how teaching managers how to be good coaches helps improve performance management.

In companies that do the best job in performance management, managers serve as coaches to employees and give frequent feedback and support. Coaching is an important skill for a manager to have. Google’s Project Oxygen, examining the behaviors that differentiated its more effective leaders from less effective ones, showed that coaching employees was among the eight differentiators. Coaches ask the right questions and model the right behaviors. They show employees how to complete difficult tasks, offer specific advice regarding how to tackle problems, and provide support.⁶⁰ As you can see, behaviors coaches perform are important for performance improvements

Developing a Feedback Culture

A feedback culture is one in which employees and managers feel comfortable giving and receiving feedback. The characteristics of an organization that has a supportive feedback environment can be seen in Figure 9.5. Top management support, role modeling for feedback, and training managers to realize the importance of feedback as a tool for performance improvement are among the steps companies may take to help create a feedback culture. Organizations are realizing that annual or semiannual reviews are woefully inadequate to provide useful feedback to employees. As a result, many organizations are instituting ways that employees can quickly and easily seek feedback at the conclusion of a project, a big meeting, or product launch. For example, Goldman Sachs and J. P. Morgan are among companies that rolled out tools accessible from smartphones to facilitate such feedback seeking any time during the year.⁶³ It is important to remember that such tools by themselves will not be useful unless there is a feedback culture in which employees feel comfortable and psychologically safe to seek and give feedback

Establishing Performance Improvement Plans (PIP)

The beginning of this chapter notes that performance reviews also serve as a tool to document poor performance. In cases of employees whose performances do not meet established performance standards, tying performance reviews to a performance improvement plan (PIP) could make these systems more developmental. Performance improvement plans keep poor performers accountable and also give them a chance to improve. The plan starts with documentation of poor performance using specific language. Then a collaborative process is used to establish an action plan. Using SMART goals as part of the action plan ensures that it is clear whether the struggling employee meets the expectations at the end of the agreed-upon period. Having a third party such as HR or the manager’s own supervisor review the plan would be helpful to ensure that the plan is fair and free from tense emotions

cisions about them.

Chapter Summary

Performance management takes the form of measuring and documenting employee performance. It provides useful feedback, documentation, and a metric that can be tied to rewards. Companies need to assess the validity and reliability of data collected and analyzed if it is to lead to good performance management practices. The traditional annual performance appraisal is too infrequent to be useful for daily feedback. Therefore, performance appraisals need to be combined with other feedback, such as one-on-one meetings or tools that allow employees to seek and receive feedback in shorter intervals. Performance appraisals may measure traits, behaviors, or results, and performance information may be derived from multiple sources, including managers, coworkers, subordinates, and customers. Because performance appraisals often involve subjectivity, many errors may occur as part of the evaluation process, resulting in nonperformance factors affecting performance ratings. Ultimately, the effectiveness of a performance management system depends on user acceptance, and therefore involving users in designing the system, ensuring that managers and employees are trained in giving and receiving feedback, and helping develop a strong culture of feedback are among the steps organizations may take to strengthen performance management systems