Performance Management Book

PERFORMANCE
MANAGEMENT
Herman Aguinis
Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Performance Management in Context:
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

Performance Management: Definition
Continuous Process of
Identifying performance of individuals and teams
Measuring performance of individuals and teams
Developing performance of individuals and teams
and
Aligning performance with the strategic goals of the
organization

PM is NOT performance appraisal
• PM • Performance appraisal
– Strategic business – Assesses employee
considerations • Strengths &
– Ongoing feedback • Weaknesses
– So employee can – Once a year
improve performance – Lacks ongoing feedback
– Driven by line manager – Driven by HR

Contributions of PM
For Employees
 The definitions of job and success are clarified

 Motivation to perform is increased
 Self-esteem is increased
 Self-insight and development and enhanced

Contributions of PM
For Managers
 Supervisors’ views of performance are

communicated more clearly
 Managers gain insight about subordinates
 There is better and more timely differentiation
between good and poor performers
 Employees become more competent

Contributions of PM
For Organization/HR Function
 Organizational goals are made clear

 Organizational change is facilitated
 Administrative actions are more fair and
appropriate
 There is better protection from lawsuits

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

for Managers
• Increased turnover
• Decreased motivation to perform
• Unjustified demands on managers’ resources
• Varying and unfair standards and ratings

for Organization
• Wasted time and money
• Unclear ratings system
• Emerging biases
• Increased risk of litigation

Reward Systems: Definition
Set of mechanisms for distributing

 Tangible returns
and
 Intangible or relational returns
As part of an employment relationship

Tangible returns
 Cash compensation
Base pay
Cost-of-Living & Contingent Pay
Incentives (short- and long-term)
 Benefits, such as
 Income Protection
 Allowances
 Work/life focus

Intangible returns
 Relational returns, such as

 Recognition and status
 Employment security
 Challenging work
 Learning opportunities

Returns and Their Degree of Dependency
on the Performance Management System
Return Degree of Dependency

 Cost of Living Adjustment • Low
 Income Protection • Low
 Work/life Focus • Moderate
 Allowances • Moderate
 Relational Returns • Moderate
 Base Pay • Moderate
 Contingent Pay • High
 Short-term Incentives • High
 Long-term Incentives • High

Purposes of PM Systems:
Overview
 Strategic
 Administrative
 Informational
 Developmental
 Organizational maintenance
 Documentation

Strategic Purpose
 Link employee behavior with organization’s

goals
 Communicate most crucial business strategic
initiatives

Administrative Purpose
 Provide information for making decisions re:

Salary adjustments
Promotions
Retention or termination
Recognition of individual performance
Layoffs

Informational Purpose
Communicate to Employees:
 Expectations
 What is important
 How they are doing
 How to improve

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

Organizational Maintenance Purpose
 Plan effective workforce

 Assess future training needs
 Evaluate performance at organizational level
 Evaluate effectiveness of HR interventions

Documentational Purpose
 Validate selection instruments

 Document administrative decisions
 Help meet legal requirements

Characteristics of an Ideal PM System

Congruent with organizational strategy
• Consistent with organization’s strategy

• Aligned with unit and organizational goals

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

Practical
• Available
• Easy to use
• Acceptable to decision makers
• Benefits outweigh(exceed in value) costs

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

Specific
Concrete and detailed guidance to

employees
• what’s expected
• how to meet the expectations

Identifies effective and ineffective performance
• Distinguish between effective and ineffective

– Behaviors
– Results
• Provide ability to identify employees with
various levels of performance

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

Valid
• Relevant (measures what is important)

• Not deficient (doesn’t measure unimportant
facets of job)
• Not contaminated (only measures what the
employee can control)

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

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

Open (No Secrets)
• Frequent, ongoing evaluations and feedback

• 2-way communications in appraisal meeting
• Clear standards, ongoing communication
• Communications are factual, open, honest

Correctable
• Recognizes that human judgment is fallible

• Appeals process provided

Standardized
• Ongoing training of managers to provide

• Consistent evaluations across
– People
– Time

Ethical
• Supervisor suppresses self-interest

• Supervisor rates only where she has sufficient
information about the performance dimension
• Supervisor respects employee privacy

Integration with other Human Resources
and Development activities
PM provides information for:

Development of training to meet organizational
needs
Workforce planning
Recruitment and hiring decisions
Development of compensation systems

CHAPTER 2

Performance Management Process:
Overview
 Prerequisites
 Performance Planning
 Performance Execution
 Performance Assessment
 Performance Review
 Performance Renewal and Recontracting
Prentice Hall, Inc. © 2006 2–39 Herman Aguinis, University of Colorado at Denver
Performance
Prerequisites
Planning
Performance
Execution
Performance Management Process
Performance
Performance
Renewal and
Assessment
Recontracting Performance
Review
Prerequisites
A. Knowledge of the organization’s

mission and strategic goals
B. Knowledge of the job in question
A. Knowledge of mission
and strategic goals
• Strategic planning
– Purpose or reason for organization’s
existence
– Where organization is going
– Organizational goals
– Strategies for attaining goals
Mission and Goals
Cascade effect throughout organization
Organization Unit Employee
B. Knowledge of the job
• Job analysis of key components

– Activities, tasks, products, services, processes
• KSAs required to do the job
– Knowledge
– Skills
– Abilities
Job Description
• Job duties
• KSAs
• Working conditions
Generic Job Descriptions
Occupational Informational Network (O*Net)

http://online.onetcenter.org/
Job analysis
• Use a variety of tools

– Interviews
– Observation
– Questionnaires (available on Internet)
Job analysis follow-up
• All incumbents should
– review information and
– provide feedback
re:
– Task
• Frequency
• Criticality
Performance Planning:
Results
Key accountabilities
Specific objectives
Performance standards
Key Accountabilities
Broad areas of a job

for which
the employee is responsible
for producing results
Specific Objectives
 Statements of outcomes
 Important
 Measurable
Performance Standards
• “Yardstick” to evaluate how well employees

have achieved each objective
• Information on acceptable and unacceptable
performance, such as
quality
quantity
cost
time
Behaviors
How a job is done
Competencies
• Measurable clusters of KSAs
• Critical in determining how results will be

achieved
Development Plan
 Areas for improvement
 Goals to be achieved in each area of
improvement
Performance Execution:
Employee Responsibilities
 Commitment to goal achievement
 Ongoing requests for feedback and coaching
 Communication with supervisor
 Collecting and sharing performance data
 Preparing for performance reviews
Performance Execution:
Manager Responsibilities
• Observation and documentation
• Updates
• Feedback
• Resources
• Reinforcement
Performance Assessment
• Manager assessment
• Self-assessment
• Other sources (e.g., peers, customers, etc.)
Multiple Assessments Are Necessary
 Increase employee ownership

 Increase commitment
 Provide information
 Ensure mutual understanding
Performance Review
Overview of Appraisal Meeting
• Past
– Behaviors and results
• Present
– Compensation to be received
• Future
– New goals and development plans
Six Steps for Conducting
Productive Performance Reviews
1. Identify what the employee has done well and
poorly
2. Solicit feedback
3. Discuss the implications of changing behaviors
Six Steps for Conducting
Productive Performance Reviews
4. Explain how skills used in past

achievements can help overcome any
performance problems
5. Agree on an action plan
6. Set a follow-up meeting and agree on
behaviors, actions, attitudes to be evaluated
Performance Renewal and
Recontracting
• Same as/different from Performance Planning

– Uses insights and information from previous
phases
– Cycle begins again
Summary: Key Points
 Ongoing process
 Each component is important
If one is implemented poorly, whole system suffers
 Links between components must be clear
CHAPTER 3
Herman Aguinis, University of Colorado at Denver

Performance Management and Strategic
Planning: Overview
Definition and Purposes of Strategic Planning
Linking Performance Management to the
Strategic Plan
– Strategic Planning
– Developing Strategic Plans at the Unit Level
– Job Descriptions
– Individual and Team Performance
Building Support
Strategic Planning: Definition
• Process
– Describe organization’s destination
– Assess barriers
– Select approaches for moving forward

Strategic Planning: Goal
• Allocate resources
– to provide organization
– with competitive advantage

Strategic Planning: Purposes
 Help define the organization’s identity
 Help organization prepare for the future
 Enhance ability to adapt to environmental
change
 Provide focus and allow for better
allocation of resources
(continued on next slide)

Strategic Planning: Purposes
Produce an organizational culture of
cooperation
Allow for the consideration of new options
and opportunities
Provide employees with information to direct
daily activities

Strategic Planning : Overview
1. Environmental Analysis
2. Mission
3. Vision
4. Goals
5. Strategies

Environmental Analysis
Identifies external and internal trends

• To understand broad industry issues
• To make decisions using “big picture” context

External trends
• Opportunities:
– environmental characteristics that can help
the organization succeed
• Threats:
– environmental characteristics that can
prevent the organization from being
successful

External trends –
Factors to Consider
• Economic • Technological
• Political/legal • Competitors
• Social • Customers
• Suppliers

Internal trends
• Strengths:
– internal characteristics that the organization
can use for its advantage
• Weaknesses:
– internal characteristics that can hinder the
success of the organization

Internal trends –
Factors to Consider
• Organizational structure
• Organizational culture
• Politics
• Processes
• Size

Gap Analysis
Analyzes:
External environment
(opportunities and threats)
vis-à-vis
Internal environment
(strengths and weaknesses)

Gap analysis determines:
Opportunity + Strength = Leverage
Opportunity + Weakness = Constraint
Threat + Strength = Vulnerability
Threat + Weakness = Problem

Strategic Planning for the Organization
Environmental and Gap Analyses provide
information for organizations to decide:
Who they are
What they do

Mission
A good mission statement answers:

 Why does the organization exist?
 What is the scope of the organization’s activities?
 Who are the customers served?
 What are the products or services offered?

Mission Statement contains:
A. Information on organization’s
 Basic product/service to be offered
 Primary market/customer groups
 Unique benefits and advantages of
product/services
 Technology to be used
 Concern for survival through growth and
profitability

Mission Statement may contain:
B. Information on organization’s values and beliefs
 Managerial philosophy
 Public image sought by organization
 Self-concept of business adopted by
 Employees
 Stockholders

Vision
• Statement of future aspirations
• Focuses attention on
1.what is important
2.Provides context for evaluating
– Opportunities
– Threats

A Good Vision Statement is:
Brief Focused
Verifiable Understandable
Bound by a Timeline Inspiring
Current A stretch

Purposes for Setting Goals
• Formalize expected achievements
• Provide motivation
• Provide tangible targets
• Provide basis for good decisions
• Provide basis for performance measurement

Strategies
• Create strategies or Game Plans or “How to”
procedures to address issues of:
– Growth
– Survival
– Turnaround
– Stability
– Innovation
– Leadership

How the HR Function contributes:
• Communicate knowledge of strategic plan
• Provide knowledge of KSAs needed for
strategy implementation
• Propose reward systems

Strategic Plans at the Unit Level
• Organization Mission statement, Vision
statement, Goals, and Strategies
Must clearly align with
And be congruent with
• Every Unit Mission statement, Vision
statement, Goals, and Strategies

Alignment of Strategic Plan with
Performance
Organization’s Strategic Plan
Mission, Vision, Goals, Strategies
Critical to involve all

Unit’s Strategic Plan levels of management
Mission, Vision, Goals, Strategies
Job Description
Critical to involve all employees Tasks, KSAs
Individual and Team Performance

Results, Behaviors, Developmental Plan
Job Descriptions
• Tasks and KSAs are congruent with
Organization and Unit strategic plans
• Activities described support mission and
vision of Organization and Unit

Individual and Team Performance
Organization and Unit mission, vision, goals lead to
 Performance management system, which
Motivates employees
Aligns development plans with organization priorities

Strategic Plan 
Choices in PM System Design
• Criteria (Behavior vs. Results)

• Participation (Low vs. High)
• Temporal Dimension (Short Term vs. Long Term)
• Level of Criteria (Individual vs. Team/Group)
• System Orientation (Developmental vs.
Administrative)
• Rewards (Pay for Performance vs. Tenure/Position)

Building Support –
Answering “What’s In It for Me?”
• Top Management:
– Help carry out vision
• All levels:
– Involvement
– Participation
– Understanding

CHAPTER 4

Defining Performance and Choosing a
Measurement Approach: Overview
Defining Performance
Determinants of Performance
Performance Dimensions
Approaches to Measuring Performance

Defining Performance
Performance is:
• Behavior
• What employees do

Performance is NOT:
• Results or Outcomes
• What employees produce

Behaviors labeled as Performance are:
1. Evaluative
– Negative
– Neutral
– Positive
2. Multidimensional
– Many different kinds of behaviors
– Advance or hinder organizational goals

Behaviors are Not always
– Observable
– Measurable

Results/Consequences may be used
– To infer(CONCLUDE) behavior
– As proxy for behavioral measure

Determinants of Performance
Performance =
Declarative Knowledge
X
Procedural Knowledge
X
Motivation

A. Declarative Knowledge
• Information about
– Facts
– Labels
– Principles
– Goals
• Understanding of task requirements

B. Procedural Knowledge
• Knowing • Skills
– What to do – Cognitive
– How to do it – Physical
– Perceptual
– Motor
– Interpersonal

C. Motivation
• Choices
– Expenditure of effort
– Level of effort
– Persistence of effort

Implications for Addressing Performance
Problems
• Managers need information to accurately identify

source(s) of performance problems
• Performance management systems must
– Measure performance
AND
– Provide information on SOURCE(s) of problems

Factors Influencing Determinants of
Performance:
• Individual characteristics
– Procedural knowledge
– Declarative knowledge
– Motivation
• HR practices
• Work environment

Performance Dimensions:
Types of multi-dimensional behaviors:
• Task performance
• Contextual performance
– Pro-social behaviors
– Organizational citizenship

Task performance
Activities that
• transform raw materials
• help with the transformation process
– Replenishing
– Distributing
– Supporting

Contextual performance
Behaviors that
• contribute to organization’s effectiveness
and
• provide a good environment in which task
performance can occur

Differences Between
Task and Contextual Performance
• Task Performance • Contextual Performance
• Varies across jobs • Fairly similar across jobs
• Likely to be role • Not likely to be role
prescribed prescribed
• Influenced by • Influenced by
• Abilities • Personality
• Skills

Why Include Task & Contextual
Performance Dimensions in PM system?
1. Global competition
2. Teamwork
3. Customer service
4. Supervisor views

Job Performance in Context
That
A performer Engages in
In a given produce
(individual or certain
situation various
team) behaviors
results
TRAIT BEHAVIOR RESULTS

Approaches to Measuring Performance
• Trait Approach
– Emphasizes individual traits of employees
• Behavior Approach
– Emphasizes how employees do the job
• Results Approach
– Emphasizes what employees produce

Trait Approach
• Emphasis on individual
• Evaluate stable traits
• Cognitive abilities
• Personality
• Based on relationship between
traits & performance

Trait Approach (continued)
• Appropriate if
• Structural changes planned for organization
• Disadvantages
• Improvement not under individual’s control
• Trait may not lead to
• Desired behaviors or
• Desired results

Behavior Approach
Appropriate if
• Employees take a long time to achieve
desired outcomes
• Link between behaviors and results is not
obvious
• Outcomes occur in the distant future
• Poor results are due to causes beyond the
performer’s control
Not appropriate if
• above conditions are not present

Results Approach
Advantages:
• Less time
• Lower cost
• Data appear objective

Results Approach (continued)
Most appropriate when:

• Workers skilled in necessary behaviors
• Behaviors and results obviously related
• Consistent improvement in results over time
• Many ways to do the job right

CHAPTER 5

Defining Performance and Choosing a
Measurement Approach: Overview
Defining Performance
Determinants of Performance
Performance Dimensions
Approaches to Measuring Performance

Performance is:
• Behavior
• What employees do

Performance is NOT:
• Results or Outcomes
• What employees produce

Behaviors labeled as Performance are:
1. Evaluative
– Negative
– Neutral
– Positive
2. Multidimensional
– Many different kinds of behaviors
– Advance or hinder organizational goals

Behaviors are Not always
– Observable
– Measurable

Results/Consequences may be used
– To infer behavior
– As proxy for behavioral measure

Determinants of Performance
Performance =
Declarative Knowledge
X
Procedural Knowledge
X
Motivation

A. Declarative Knowledge
• Information about
– Facts
– Labels
– Principles
– Goals
• Understanding of task requirements

B. Procedural Knowledge
• Knowing • Skills
– What to do – Cognitive
– How to do it – Physical
– Perceptual
– Motor
– Interpersonal

C. Motivation
• Choices
– Expenditure of effort
– Level of effort
– Persistence of effort

Implications for Addressing Performance
Problems
• Managers need information to accurately identify

source(s) of performance problems
• Performance management systems must
– Measure performance
AND
– Provide information on SOURCE(s) of problems

Factors Influencing Determinants of
Performance:
• Individual characteristics
– Procedural knowledge
– Declarative knowledge
– Motivation
• HR practices
• Work environment

Performance Dimensions:
Types of multi-dimensional behaviors:
• Task performance
• Contextual performance
– Pro-social behaviors
– Organizational citizenship

Task performance
Activities that
• transform raw materials
• help with the transformation process
– Replenishing
– Distributing
– Supporting

Contextual performance
Behaviors that
• contribute to organization’s effectiveness
and
• provide a good environment in which task
performance can occur

Differences Between
Task and Contextual Performance
• Task Performance • Contextual Performance
• Varies across jobs • Fairly similar across jobs
• Likely to be role • Not likely to be role
prescribed prescribed
• Influenced by • Influenced by
• Abilities • Personality
• Skills

Why Include Task & Contextual
Performance Dimensions in PM system?
1. Global competition
2. Teamwork
3. Customer service
4. Supervisor views

Job Performance in Context
That
A performer Engages in
In a given produce
(individual or certain
situation various
team) behaviors
results
TRAIT BEHAVIOR RESULTS

Approaches to Measuring Performance
• Trait Approach
– Emphasizes individual traits of employees
• Behavior Approach
– Emphasizes how employees do the job
• Results Approach
– Emphasizes what employees produce

Trait Approach
• Emphasis on individual
• Evaluate stable traits
• Cognitive abilities
• Personality
• Based on relationship between
traits & performance

Trait Approach (continued)
• Appropriate if
• Structural changes planned for organization
• Disadvantages
• Improvement not under individual’s control
• Trait may not lead to
• Desired behaviors or
• Desired results

Behavior Approach
Appropriate if
• Employees take a long time to achieve
desired outcomes
• Link between behaviors and results is not
obvious
• Outcomes occur in the distant future
• Poor results are due to causes beyond the
performer’s control
Not appropriate if
• above conditions are not present

Results Approach
Advantages:
• Less time
• Lower cost
• Data appear objective

Results Approach (continued)
Most appropriate when:

• Workers skilled in necessary behaviors
• Behaviors and results obviously related
• Consistent improvement in results over time
• Many ways to do the job right

CHAPTER 6

Gathering Performance Information:
Overview
• Appraisal Forms
• Characteristics of Appraisal Forms
• Determining Overall Rating
• Appraisal Period and Number of Meetings
• Who Should Provide Performance Information?
• A Model of Rater Motivation
• Preventing Rating Distortion through Rater Training
Programs

Major Components of Appraisal Forms (1)
• Basic Employee Information
• Accountabilities, Objectives, and Standards
• Competencies and Indicators
• Major Achievements and Contributions
• Stakeholder Input
• Employee Comments
• Signatures
(could be
included in a separate form)
• Developmental Achievements
• Developmental
– Needs
– Plans
– Goals

Desirable Features for All Appraisal Forms
• Simplicity • Comprehensiveness
• Relevancy • Definitional Clarity
• Descriptiveness • Communication
• Adaptability • Time Orientation

Determining Overall Rating
• Judgmental strategy
• Mechanical strategy

Appraisal period
Number of Meetings
• Annual
• Semi-annual
• Quarterly

When Review Is Completed
• Anniversary date
– Supervisor doesn’t have to fill out forms at same time
– Can’t tie rewards to fiscal year
• Fiscal year
– Rewards tied to fiscal year
– Goals tied to corporate goals
– May be burden to supervisor, depending on
implementation

6 Types of Formal Meetings
(can be combined)
• System Inauguration
• Self-Appraisal
• Classical Performance Review
• Merit/Salary Review
• Development Plan
• Objective Setting

Who Should Provide Performance Information?
Employees should be involved in selecting
• Which sources evaluate
• Which performance dimensions
When employees are actively involved

• Higher acceptance of results
• Perception that system is fair

Who Should Provide Performance Information?
Direct knowledge of employee performance

• Supervisors
• Peers
• Subordinates
• Self
• Customers

Supervisors
• Advantages
– Best position to evaluate performance vs. strategic
goals
– Make decisions about rewards
• Disadvantages
– Supervisor may not be able to directly observe
performance
– Evaluations may be biased

Peers
• Advantages
– Assess teamwork
• Disadvantages
– Possible friendship bias
– May be less discriminating

Subordinates
• Advantages
– Accurate when used for developmental purposes
– Good position to assess some competencies
• Disadvantages
– Inflated when used for administrative purposes
– May fear retaliation (confidentiality is key)

Self
• Advantages
– Increased acceptance of decisions
– Decreased defensiveness during appraisal interview
– Good position to track activities during review period
• Disadvantages
– May be more lenient and biased

Customers (external and internal)
• Advantages
– Employees become more focused on meeting
customer expectations
• Disadvantages
– Time
– Money

Disagreement Across Sources
• Expect disagreement
• Ensure employee receives feedback by
source
• Assign differential weights to scores by
source, depending on importance

Types of Rating Errors
• Intentional errors
– Rating inflation
– Rating deflation
• Unintentional errors
– Due to complexity of task

A Model of Rater Motivation
Expected Positive and

Negative Consequences of
Rating Accuracy
Motivation to Provide
Accurate Ratings
Probability of Experiencing
Positive & Negative
Consequences Rating Behavior
Expected Positive and

Negative Consequences of
Rating Distortion
Motivation to Distort Ratings

Probability of Experiencing
Positive & Negative
Consequences

Motivations for Rating Inflation
• Maximize merit raise/rewards

• Encourage employees
• Avoid creating written record
• Avoid confrontation with employees
• Promote undesired employees out of unit
• Make manager look good to his/her supervisor

Motivations for Rating Deflation
• Shock employees
• Teach a lesson
• Send a message to employee
• Build a written record of poor performance

Prevent Rating Distortion through
Rater Training Programs

Rater Training Programs should cover:
• Information
• Motivation
• Identifying, observing, recording and
evaluating performance
• How to interact with employees when they
receive performance information

Information - how the system works
• Reasons for implementing the performance
management system
• Information on the appraisal form and system
mechanics

Motivation – What’s in it for me?
• Benefits of providing accurate ratings
• Tools for providing accurate ratings

Identifying, observing, recording, and evaluating
performance
• How to identify and rank job activities

• How to observe, record, measure
performance
• How to minimize rating errors

How to interact with employees
when they receive performance information
• How to conduct an appraisal interview

• How to train, counsel, and coach

CHAPTER 7

Implementing a Performance Management
System: Overview
• Preparation
• Communication Plan
• Appeals Process
• Training Programs
• Pilot Testing
• Ongoing Monitoring and Evaluation

Preparation
• Need to gain system establishment:

– Communication plan regarding
Performance Management system
• Including appeals process
– Training programs for raters
– Pilot testing system
• Ongoing monitoring and evaluation

Communication Plan answers:
• What is Performance Management (PM)?
• How does PM fit in our strategy?
• What’s in it for me?
• How does it work?
• What are our roles and responsibilities?
• How does PM relate to other initiatives?

Cognitive Biases that affect
communications effectiveness
• Selective exposure
• Selective perception
• Selective retention

To minimize effects of cognitive biases:
A. Consider employees:
• Involve employees in system design
• Show how employee needs are met

B. Emphasize the positive

• Use credible communicators
• Strike first – create positive attitude
• Provide facts and conclusions

C. Repeat, document, be consistent

• Put it in writing
• Use multiple channels of communication
• Say it, and then – say it again

Appeals Process
• Promote Employee buy-in to PM system

– Amicable/Non-retaliatory
– Resolution of disagreements

Appeals Process
• Employees can question two types of issue:

– Judgmental
• (validity of evaluation)
– Administrative
• (whether policies and procedures were followed)

Appeals Process
• Level 1
– HR reviews facts, policies, procedures
– HR reports to supervisor/employee
– HR attempts to negotiate settlement
• Level 2
– Arbitrator (panel of peers and managers) and/or
– High-level manager – final decision

Rater Training Programs
• Content Areas to include

– Information
– Identifying, Observing, Recording, Evaluating
– How to Interact with Employees

Content
A. Information - how the system works

– Reasons for implementing the
performance management system
– Information
• the appraisal form
• system mechanics

Content
B. Identifying, observing, recording, and

evaluating performance
– How to identify and rank job activities
– How to observe, record, and measure
performance
– How to minimize rating errors

Content
C. How to interact with employees when

they receive performance information
– How to conduct an appraisal interview
– How to train, counsel, and coach

Choices of Training Programs
• Rater Error Training (RET)
• Frame of Reference Training (FOR)
• Behavioral Observation Training (BO)
• Self-leadership Training (SL)

Rater Error Training (RET)
• Goals of Rater Error Training (RET)

– Make raters aware of types of rating errors
– Help raters minimize errors
– Increase rating accuracy

Intentional rating errors
• Leniency (inflation)
• Severity (deflation)
• Central tendency

Possible Solutions for Types of Rating Errors
• Intentional
– Focus on motivation
– Demonstrate benefits of providing accurate
ratings
• Unintentional
– Alert raters to different errors and their
causes

Frame of Reference Training (FOR)
• Goal of Frame of Reference Training

(FOR)*
– Raters develop common frame of reference
• Observing performance
• Evaluating performance
*Most appropriate when PM appraisal system focuses on behaviors

Expected Results of Frame of Reference Training (FOR)
• Raters provide consistent, more accurate
ratings
• Raters help employees design effective
development plans

Behavioral Observation Training (BO)
• Goals of Behavioral Observation Training

(BO)
– Minimize unintentional rating errors
– Improve rater skills by focusing on how
raters:
• Observe performance
• Store information about performance
• Recall information about performance
• Use information about performance

Self-leadership Training (SL)
• Goals of Self-leadership Training (SL)

– Improve rater confidence in ability to
manage performance
– Enhance mental processes
– Increase self-efficacy

Pilot Testing
• Provides ability to
– Discover potential problems
– Fix them

Pilot Testing - benefits
• Gain information from potential participants

• Learn about difficulties/obstacles
• Collect recommendations on how to improve
• Understand personal reactions
• Get early buy-in
• Get higher rate of acceptance

Implementing a Pilot Test
• Roll out test version with sample group

– Staff and jobs generalizable to organization
• Fully implement planned system
– All participants keep records of issues encountered
– Do not record appraisal scores
– Collect input from all participants

Ongoing Monitoring and Evaluation
• When system is implemented, decide:

– How to evaluate system effectiveness
– How to measure implementation
– How to measure results

Evaluation data to collect:
• Reactions to the system

• Assessments of requirements
– Operational
– Technical
• Effectiveness of performance ratings

Indicators to consider
• Number of individuals evaluated

• Distribution of performance ratings
• Quality of information
• Quality of performance discussion meetings
• System satisfaction
• Cost/benefit ratio
• Unit-level and organization-level performance

CHAPTER 8

Performance Management and Employee
Development: Overview
• Personal Developmental Plans
• Direct Supervisor’s Role
• 360-degree Feedback Systems

Stakeholders in the Development Process
• Employees
– Help plan their own development
– Improve their own performance
• Managers
– Help guide the process of development
– Support success of process

Personal Developmental Plans
• Specify actions necessary to improve

performance
• Highlight employee’s
– Strengths
– Areas in need of development

Personal Developmental Plans answer:
• How can I continuously learn and grow in
the next year?
• How can I do better in the future?
• How can I avoid performance problems
of the past?

Personal Developmental Plans:
Overview
• Developmental Plan Objectives

• Content of Developmental Plan
• Developmental Activities

Overall Developmental Plan Objectives
• Encourage:
– Continuous learning
– Performance improvement
– Personal growth

Specific Developmental Plan Objectives
• Improve performance in current job

• Sustain performance in current job
• Prepare employee for advancement
• Enrich employee’s work experience

Content of Developmental Plan
• Developmental objectives
– New skills or knowledge
– Timeline
• How the new skills or knowledge will be acquired
– Resources
– Strategies
• Standards and measures used to assess
achievement of objectives

Content of Developmental Plan
• Based on needs of organization and employee

• Chosen by employee and direct supervisor
• Taking into account
– Employee’s learning preferences
– Developmental objective in question
– Organization’s available resources

Developmental Activities
‘On the job’
• On-the-job-training
• Mentoring
• Job rotation
• Temporary assignments

Developmental Activities
In addition to ‘on the job’
• Courses
• Self-guided reading
• Getting a degree
• Attending a conference
• Membership or leadership role
– in professional or trade organization

Direct Supervisor’s Role:
• Explain what is necessary

• Refer employee to appropriate
developmental activities
• Review & make suggestions regarding
developmental objectives

Direct Supervisor’s Role (ongoing):
• Check on employee’s progress

• Provide motivational reinforcement

360-degree Feedback Systems
Tools to help employees

• Improve performance by using
• Performance information
• Gathered from many sources
– Superiors
– Peers
– Customers
– Subordinates
– The employee

360-degree Feedback Systems
• Anonymous feedback
• Most useful when used
– For DEVELOPMENT
– NOT for administrative purposes
• Internet used for collecting data

Necessary organizational norms include:
• Cooperation
• Openness and trust
• Input and participation valued
• Fairness

Overview of 360-degree Feedback Systems
• Advantages of 360-degree Feedback Systems

• Risks of 360-degree Feedback Systems
• Characteristics of a Good 360-degree
Feedback System

Advantages of 360-degree Feedback Systems
• Decreased possibility of biases

• Increased awareness of expectations
• Increased commitment to improve
• Improved self-perception of performance
• Improved performance
• Reduction of ‘undiscussables’
• Increased employee control of their own careers

Risks of 360-degree Feedback Systems
• Unconstructive negative feedback hurts.

• Are individuals comfortable with the system?
User acceptance is crucial.
• If few raters, anonymity is compromised.
• Raters may become overloaded.
• Stock values may drop.

Characteristics of a Good 360-degree Feedback System
• Anonymity • Used for developmental

• Observation of employee purposes only
performance • Emphasis on behaviors
• Avoidance of survey • Raters go beyond ratings
fatigue • Feedback interpretation
• Raters are trained • Follow-up

CHAPTER 9

Performance Management Skills:
Overview
• Coaching
• Coaching Styles
• Coaching Process
• Performance Review Meetings

Coaching: Definition
• Manager
– Interacts with employee and
– Takes active role and interest in performance
• Collaborative ongoing process
– Directing employee behavior
– Motivating employee behavior
– Rewarding employee behavior
• Concerned with long-term performance
Major Coaching Functions:
• Give advice
• Provide guidance
• Provide support
• Give confidence
• Promote greater competence

Key Coaching Behaviors
• Establish developmental objectives
• Communicate effectively
• Motivate employees
• Document performance
• Give feedback
• Diagnose performance problems
• Develop employees

The Good Coach Questionnaire
 Do you listen to your employees?
 Do you understand their individual needs?
 Do you encourage employees to express
their feelings openly?
 Do you give tangible and intangible support
for development?
 Do your employees know your expectations
about their performance?

The Good Coach Questionnaire (continued)
Do you encourage open and honest discussions
and problem solving?
Do you help your employees create action plans
that will
Solve problems?
Create changes?
Do you help your employees explore potential
areas of
Growth?
Development?

Coaching Styles
More Assertive Less assertive
Task & Fact

oriented Driver Analyzer
People oriented Persuader Amiable

Adaptive coaches use all styles
according to employee needs:
• Sometimes providing direction

• Sometimes persuading
• Sometimes showing empathy
• Sometimes paying close attention to rules and
established procedures

Coaching Process
Identify
Developmental
Set Resources &
Developmenta Strategies
l Goals
Implement
strategies
Give Feedback
Observe and Document
Developmental Behavior

Coaching Process:
Steps covered in Chapter 8
• Set Developmental Goals

• Identify Resources and Strategies
Needed to Implement Developmental
Goals
• Implement Developmental Goals

Coaching Process:
Overview of remaining steps
• Observe and Document Developmental

Behavior and Outcomes
• Give Feedback
– Praise
– Negative Feedback

Observe and Document Developmental Behavior and
Outcomes
Constraints:
• Time
• Situation
• Activity

Organizational Activities to
improve documentation of performance
• Good communication plan to get manager buy-in

• Training programs
– Rater error training
– Frame-of-reference training
– Behavioral observation training
– Self-leadership training

Reasons to document performance
• Minimize cognitive load

• Create trust
• Plan for the future
• Legal protection

Recommendations for Documentation
• Be specific
• Use adjectives and adverbs sparingly
• Balance positives with negatives
• Focus on job-related information
• Be comprehensive
• Standardize procedures
• Describe observable behavior

Giving Feedback
• Main purposes:
– Help build confidence
– Develop competence
– Enhance involvement
– Improve future performance

Potential costs of failing to provide feedback:
• Employees are deprived of chance to

improve their own performance
• Chronic poor performance
• Employees have inaccurate perceptions of
how their performance is regarded by others

To be effective, feedback should:
• Be timely
• Be frequent
• Be specific
• Be verifiable
• Be consistent (over time and across employees)
• Be given privately
• Provide context and consequences
(continued next slide)

To be effective, feedback should: (continued)
• Describe first, evaluate second

• Cover the continuum of performance
• Identify patterns
• Demonstrate confidence in employee
• Allow for both advice and idea generation

Guidelines for Giving Praise
• Be sincere – only give praise when it is

deserved
• Give praise about specific behaviors or results
• Take your time
• Be comfortable with act of praising
• Emphasize the positive

Giving Negative Feedback
Managers avoid giving negative feedback due to:
• Negative reactions and consequences
• Negative experiences in the past
• Playing “god”
• Need for irrefutable and conclusive evidence

Negative feedback is most useful when it:
• Identifies warning signs and performance

problem is still manageable
• Clarifies unwanted behaviors and
consequences
• Focuses on behaviors that can be changed
• Comes from a credible source
• Is supported by data

Feedback Sessions should always answer:
• How is your job going?

• What can be done to make it better?
– Job
– Product
– Services
• How can you better serve your customers?
– Internal
– External

Supervisory roles in managing performance
• Judge
– Evaluate performance
– Allocate rewards
• Coach
– Help employee solve performance problems
– Identify performance weaknesses
– Design developmental plans

Performance Review Formal Meetings
Possible types of formal meetings:

1. System Inauguration
2. Self-Appraisal
3. Classical Performance Review
4. Merit/Salary Review
5. Developmental Plan
6. Objective Setting

Steps to take before meeting:
• Give at least 2-weeks notice

• Block sufficient time
• Arrange to meet in a private location without
interruptions

Merged Performance Review Meeting
Components
1. Explanation of meeting purpose

2. Employee self-appraisal
3. Supervisor & employee share rating and rationale
4. Developmental discussion
5. Employee summary
6. Rewards discussion
7. Follow-up meeting arrangement
8. Approval and appeals process discussion
9. Final recap
Possible defensive behaviors of employees
• Fight response
– Blaming others
– Staring at supervisor
– Raising voice
– Other aggressive responses
• Flight response
– Looking/turning away
– Speaking softly
– Continually changing the subject
– Quickly agreeing without basis
– Other passive responses

To prevent/reduce defensive behaviors
• Establish and maintain rapport
• Be empathetic
• Observe verbal and nonverbal cues
• Minimize threats
• Encourage participation

When defensiveness is unavoidable:
 Recognize it
 Allow its expression
If situation becomes intolerable

 Reschedule the meeting for a later time

CHAPTER 10

Reward Systems and Legal Issues
Overview
• Reward Systems
• Legal Issues

Reward Systems: Overview
• Traditional and Contingent Pay (CP) Plans

– Reasons for Introducing CP Plans
– Possible Problems Associated with CP
– Selecting a CP Plan
• Putting Pay in Context
• Pay Structures

Traditional Pay
• Salary and salary increases are based on

– Position
– Seniority

Contingent Pay (CP)
• Salary and salary increases are based on

– Job performance
• Also called: Pay for Performance

• If not added to base pay, called:
– Variable pay

Reasons for Introducing CP
• Performance management is more effective when
rewards are tied to results
• CP Plans force organizations to:
– Clearly define effective performance
– Determine what factors are necessary
• CP plans help to recruit and retain top performers
• CP plans project good corporate image

CP plans help improve motivation when:
• Employees see clear link between their efforts and

resulting performance (Expectancy)
• Employees see clear link between their
performance level and rewards received
(Instrumentality)
• Employees value the rewards available (Valence)
motivation =
expectancy x instrumentality x valence

Possible Problems Associated with CP
• Poor performance management system

• Rewarding counterproductive behavior
• Insignificant rewards
• The reward becomes the driver
• Extrinsic vs. intrinsic motivation
• Disproportionately large rewards for executives

Selecting a CP Plan: Issues to consider
A. Culture of organization
B. Strategic direction of organization

A. Culture of organization: Types of organizations
• Traditional
– Top-down decision making
– Vertical communication
– Jobs that are clearly defined
• Involvement
– Shared decision making
– Lateral communications
– Loosely defined roles

CP systems for different organizational cultures:
• Traditional organizations
– Piece rate
– Sales commissions
– Group incentives
• Involvement organizations
– Profit sharing
– Skill-based pay

B: CP Plans to enhance Strategic Directions:
• Employee development • Productivity
– Skill based pay – Individual
• Piece rate
• Customer service • Sales commissions
– Competency based pay – Group
– Gainsharing • Gainsharing
• Group incentives
• Overall Profit • Teamwork
– Executive pay – Team sales commissions
– Profit or stock sharing – Gainsharing
– Competency based pay

Putting Pay in Context
A reward increases the chance that

• Specific behaviors and results will be repeated, or
• Employee will engage in new behavior and
produce better results

Rewards can include:
• Pay • Trust & Respect
• Recognition • Challenge
– Public • Responsibility
– Private • Freedom
– Status
• Relationships
• Time

How to Make Rewards Work
• Define and measure performance first and
then allocate rewards
• Only use rewards that are available
• Make sure all employees are eligible
• Rewards should be both
– Financial
– Non-financial
(continued)

How to Make Rewards Work (continued)
• Rewards should be:
– Visible
– Contingent
– Timely
– Reversible

Pay Structures
• Job Evaluation
• Broad-banding

Pay structures
An organization’s pay structure

 Classifies jobs
Into categories
Based on their relative worth
 Is designed by job evaluation methods

Job evaluation
• Method of data collection
– Determine the worth of various jobs to
– Create a pay structure
• Consideration of
– KSAs required for each job
– Value of job for organization
– How much other organizations pay

Types of job evaluation methods:
• Ranking
• Classification
• Point

Job evaluation methods: Ranking
• Create job descriptions
• Compare job descriptions
• Rank jobs

Advantages of using Ranking method
• Requires little time

• Minimal effort needed for administration

Disadvantages of using Ranking method
• Criteria for ranking may not be clear:

• Distances between each rank may not
be equal

Job evaluation methods: Classification
• A series of classes or grades are created

• Each job is placed within a job class

Advantages of using Classification method
• Jobs can be quickly slotted into structure

• Employees accept method because it seems
valid

Disadvantages of using Classification method
• Requires extensive time and effort for

administration
• Differences between classification levels
may not be equal

Job evaluation methods: Point method
• Identify compensable factors (job characteristics)

• Scale factors (e.g. on a scale of 1 – 5)
• Assign a weight to each factor so the sum of the
weights for all factors = 100%

Advantages of using Point method
• Establish worth of each job relative to all

other jobs within organization
• Comprehensive measurement of relative
worth of each job in organization
• Easy to rank jobs when total points are
known for each job

Disadvantages of using Point method
• Requires extensive administrative

– Time
– Effort

Does job evaluation method matter?
– Fairness
– Evaluators
• Impartial
• Objective

Compensation surveys
• Information on
– Base pay
– All other types of compensation
• Conducted in-house or by consultants, such as:

www.salary.com or www.haypaynet.com

Broad-banding:
Pay structure collapses job classes into fewer

categories
Advantages:
• Provides flexibility in rewarding people
• Reflects changes in organization structure
• Provides better base for rewarding growth in
competence
• Gives more responsibility for pay decisions to
managers
• Provides better basis for rewarding career progression
Reward Systems: Summary
• Traditional and Contingent Pay (CP) Plans

– Reasons for Introducing CP Plans
– Possible Problems Associated with CP
– Selecting a CP Plan
• Putting Pay in Context
• Pay Structures

Legal Issues: Overview
• Performance Management and the Law

• Some Legal Principles Affecting PM
• Laws Affecting PM

Performance Management and the Law
• Performance management systems are legally

sound, if they are fair:
– Procedures are standardized
– Same procedures are used with all employees

Some Legal Principles Affecting PM:
Overview
• Employment-at-will
• Negligence
• Defamation
• Misrepresentation
• Adverse Impact
• Illegal Discrimination

Employment-at-will
• Employment relationship can be ended at any time by
– Employer
– Employee
• Exceptions
– Implied contract
– Possible violation of legal rights

Negligence
• If organization documents describe a system

and
• It is Not implemented as described,
• Employee can challenge evaluation,
charging negligence

Defamation
• Disclosure of performance information that is

– Untrue and
– Unfavorable

Misrepresentation
• Disclosure of performance information that is
– Untrue and
– Favorable

Adverse Impact / Unintentional Discrimination
• PM system has unintentional impact on a protected

class
• Organization must demonstrate:
– Specific requirement for the job
– All affected employees are evaluated in the same way
• Organization should review ongoing performance
score data by protected class to implement corrective
action as necessary

Illegal Discrimination or Disparate Treatment
• Raters assign different scores to employees

based on factors that are NOT related to
performance
• Employees receive different treatment as result
of such ratings
• Employees can claim they were intentionally and
illegally treated differently due to their status

Employee claim of illegal discrimination:
• Direct evidence of discrimination, or

• Evidence regarding the following:
– Membership in protected class
– Adverse employment decision
– Performance level deserved reward/different
treatment
– How others were treated (not in protected class)

Employer response to claim of illegal discrimination
• Legitimate and non-discriminatory reason for action

• Related to performance
• Note: Good performance management system and

subsequent performance-related decision, used
consistently with all employees, provides defense

Laws Affecting PM:
During past few decades, several countries have

passed laws prohibiting discrimination based on:
•Race or Ethnicity
•Sex
•Religion
•National Origin
•Age
•Disability status
•Sexual orientation

Laws in the United Kingdom:
• Equal Pay Act of 1970

• Race Relations Act of 1976
• Sex Discrimination Act of 1975
• Disability Discrimination Act of 1995
• Employment Equality (Sexual Orientation)
Regulations 2003
• Employment Equality (Religion or Belief)
Regulations 2003

Laws in the United States of America
• Equal Pay Act of 1963

• Civil Rights Act of 1964
• Age Discrimination in Employment Act of 1967
(as amended in 1986)
• Americans with Disabilities Act of 1990

Characteristics of Legally Sound PM Systems
• Organization:
– The system is formally explained and communicated to all
employees
– The system includes a formal appeals process
– Procedures are standardized and uniform for all employees
within a job group
– The system includes procedures to detect potentially
discriminatory effects or biases and abuses in the system

• Management
– Supervisors are provided with formal training and information
on how to manage the performance of their employees
– Performance information is gathered from multiple, diverse,
and unbiased raters
– The system includes thorough and consistent documentation
including specific examples of performance based on first-
hand knowledge

• Employees
– Performance dimensions and standards are:
• Clearly defined and explained to the employee,
• Job-related, and
• Within the control of the employee
– Employees are given
• Timely information on performance deficiencies and
• Opportunities to correct them
– Employees are given a voice in the review process and
treated with courtesy and civility throughout the process

Legal Issues: Summary
• Performance Management and the Law
• Some Legal Principles Affecting PM
• Laws Affecting PM

CHAPTER 11

Managing Team Performance:
Overview
• Definition and Importance of Teams
• Types of Teams and Implications for PM
• Purposes and Challenges of Team PM
• Including Team Performance in the PM
System
• Rewarding Team Performance

Definition of Team
Two or more people

– Interact
• Dynamically
• Independently
– Share common and valued
• Goal, Objective or Mission

Importance of Teams
• Global pressures
• Flexibility in flatter organizations
• Complexity of products and services
• Rapidly changing environments

Performance Management & Teams
• PM systems should target:

– Individual performance
– Individual’s contribution to team performance
– Performance of entire team

General principles of PM relating to teams
1. Design and implement best possible system

2. Consider dangers of poorly implemented
system

Managing for Improved Team Performance
• Don’t limit team processes with other task

or organizational requirements
• Provide good team design and
organizational support
• Give feedback only on processes that the
team members can control

Types of Teams
• Classified by
– Complexity of task
– Membership configuration

Complexity of Task ranges from:
• Routine
– Well defined
– Few deviations in how work is done
– Outcomes easily assessed
- to -
• Non-routine
– Not defined well
– No clear specifications on how to do the work
– Outcomes are long term and difficult to assess

Membership Configuration includes
• Length of time team expects to work together
• Stability of team membership
Static Dynamic

Types of Teams Based on
Membership Configuration and Task Complexity
Dynamic ° Network
Teams
Membership ° Project
Teams
Configuration
Static ° Work and
Service Teams
Routine Non-Routine
Task Complexity

Types of Teams
• Work or Service Teams

• Project Teams
• Network Teams

Work or Service Teams
• Intact
• Routine tasks
• Share similar skill sets

Project Teams
• Assembled for specific purpose
• Tasks outside core product or service
• Members from different functional areas

Network Teams
• Membership not constrained by
– Time or space
– Organizational boundaries
• Teams may include
– Temporary or full-time workers
– Customers
– Vendors
– Consultants
• Work is extremely non-routine

Examples of PM Approaches by Type of Team
• Type of Team • Type of PM Approach

– Work & Service Team – Peer ratings
– Project Team – Ongoing measurements
– Development of
– Network Team competencies

Purposes of Team PM
• Traditional goals of any PM System
• Specific to Team performance:
– Make all team members accountable
– Motivate all team members to have a stake in team
performance

Challenges of Team PM
• How do we assess relative individual
contribution?
• How do we balance individual and team
performance?
• How do we identify individual and team
measures of performance?

Including Team Performance in the PM System
• Prerequisites
• Performance Planning
• Performance Execution
• Performance Assessment
• Performance Review
• Performance Renewal and Re-Contracting

Performance
Prerequisites
Planning
Performance
Execution
Performance
Performance
Renewal and
Assessment
Re-contracting Performance
Review

Prerequisites
• Knowledge of mission
– Organization
– Team
• Knowledge of job to be performed by the
team

Performance Planning
• Results expected of the team

• Behaviors expected of team members
• Developmental objectives to be achieved by
team and its members

Performance Execution
Team responsibilities
1. Commit to goal achievement
2. Seek feedback from
• Each other
• Supervisor
3. Communicate openly & regularly
4. Conduct regular & realistic peer-
appraisals

Performance Execution
Supervisor responsibilities
1. Observe and document
• Team performance
• Relative contribution of team members
2. Update team on any changes in goals of the
organization
3. Provide resources & reinforcement

Types of Assessments
• Self-appraisals
• Peer evaluations
• Supervisor evaluation
• Outsider appraisals (if appropriate)

Kinds of Performance to be Assessed

• Individual task performance
• Individual contextual performance
• Team performance

Dimensions of Team Performance to assess:
• Effectiveness
• Efficiency
• Learning and growth
• Team member satisfaction

Performance Review
• Two meetings with supervisor or review board

– Team meeting
– Individual meeting
• Emphasis on past, present and future

Team meeting
• Discuss overall team

– Performance
– Results
• Information comes from:
– Team members
– Other teams/outsiders
– Supervisor’s evaluation

Individual meeting
• Discuss how individual behavior contributed to

team performance
• Information comes from:
– Self-appraisal
– Peer ratings
– Supervisor’s evaluation

Performance Renewal and Re-Contracting
• Make adjustments to performance plan

• Include plan for individual performance as it
affects team functioning

Making Team-based Rewards Effective
• All employees should be eligible
• Rewards should be
– Visible
– Contingent
– Reversible
• Avoid factors which cause reward systems to fail
• Consider variable pay systems (in addition to
individual bonuses)

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PERFORMANCE

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

 The definitions of job and success are clarified

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

 Supervisors’ views of performance are

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

 Organizational goals are made clear

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Set of mechanisms for distributing

As part of an employment relationship

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

 Relational returns, such as

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Return Degree of Dependency

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

 Link employee behavior with organization’s

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 Provide information for making decisions re:

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

 Plan effective workforce

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 Validate selection instruments

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• Consistent with organization’s strategy

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• All employees are evaluated

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Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

• Standards are important and relevant

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Concrete and detailed guidance to

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

• Distinguish between effective and ineffective

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

• Relevant (measures what is important)

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

• Perception of Distributive Justice

• Perception of Procedural Justice

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

• Represents concerns of all involved

– Employee should provide input on performance

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

• Frequent, ongoing evaluations and feedback

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

• Recognizes that human judgment is fallible

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver

• Ongoing training of managers to provide

Prentice Hall, Inc. © 2006 Herman Aguinis, University of Colorado at Denver