MGMT2718

Human Resource Management

Lecture 11: Performance

Management and Performance
Appraisal

Introduction: Definitions and Issues

Performance management
the process of translating the organisations objectives and
strategies into individual job objectives and performance
standards usually linked to reward or sanction
Orgs objectives cascade down from the CEO, to
department heads, supervisors and the individual
Powerful means of employee control especially if coupled
with variable rewards (next lecture)

Performance appraisal:
assesses progress towards the achievement of the
desired goals or other performance standards

Performance feedback:
the process of providing employees with information
regarding their performance effectiveness and causes of
gaps can be taken personally!

Issues
Performance Appraisal
Seeks to identify the elements of individual contribution
Indicators must be well designed valid and reliable (ie not
permit discrimination)
Process must be fair or felt to be fair acceptable
Feedback given during a performance evaluation process identify
deficient aspects of the employee s performance and the causes
(e.g. a skill deficiency, a motivation problem) in a nonthreatening way, and with respect!

Acceptability > the crucial importance of felt fairness

A poorly designed and/or administered PA/PM system will
negatively affect employee motivation
The fine line between performance management and bullying
(assignment)
The line of sight between performance and criteria by which
performance is judged

Lecture Objectives
Identify the determinants and purposes of performance
management
Identify criteria for effective performance management
systems
Identify and discuss approaches to PM, and their advantages
and disadvantages
Identify information sources, and their pros and cons
Identify sources and types of rating errors
Lecture Structure
1. Performance Management
2. Performance Appraisal
3. Considerations in Delivering a Performance Appraisal

1.Performance Management
Performance management: the process through which
managers ensure that employees activities and outputs
are congruent with the organisations goals
Stone- Unitarist take
Creation of a shared vision.
Establishment of performance objectives (Link to JA)
Identify, define and communicate what good performance
looks like to enable people to understand the level of their
expected and actual performance
Use of a formal review process to evaluate functional group
and individual progress towards goal achievement.
The linking of performance evaluation and employee
development and rewards to motivate and reinforce
desired behaviour.

Importance of accurate measures

Validity
Construct validity measures should be directly relevant
to what the job requires
Content validity comprehensive coverage of all aspects
of job
Criterion-related validity accuracy of performance
measures (ie Level of achievement]

Reliability
Consistent inter-rater reliability

Affects felt fairness and Acceptability

And therefore employee motivation

Dangers of Measurement Fetishism

Measuring Performance Results
tendency to concentrate on that which is easily
measurable, ie tangible
Assumption that All aspects of performance can be
measured, or are being measured
Eg Drucker:
you cant manage what you cant measure; AND what
gets measured gets done
BUT: What gets measured is often what is easy to measure.
Ignores the

invisible linking work

Organisational Citizenship Behaviour (OCB)

It is said that Performance goals/criteria

should be

Specific and Stretching

Measurable
Agreed, Attainable (Achievable)
Realistic, Relevant and Results-oriented
Time-bound and Timely

This

2. Performance Appraisal
PA discriminates between employees on an employmentrelated basis. Important that it does not (and is not seen to)
discriminate on another basis esp race, religion, etc
Individual performance appraisal is necessary to deal with
non-performers.
Unfair Dismissal provisions of Fair Work Act (and previous
legislation) require procedural fairness ie regular performance
reviews and counselling
https://www.youtube.com/watch?v=ui0cRSENXhE
Utopia S 2 Ep 7; 1.20; 5; 11; 1812; 19.40; 22.50; 24]
Can performance manage employees out.

Distinction between bullying and performance management.

Dangers of PA gone wrong

Performance Appraisal:
Purposes

Individual Appraisal (1) Bases

A. Outcomes-based (goal achievement compared with
objectives (MBO)
B. Inputs-based
1. Trait-based (employee characteristics or attitudes)
2. Competence-based (capabilities)
3. Behaviourally-based (behaviours rated against weighted
job criteria)

Individual Appraisal (2) Approaches

1. Results (goal-setting)

Criterion-referenced

2. Ranking (comparisons amongst people)

Employees compared to each other

3. Rating (comparing peoples attributes/traits and

behaviours) to some standard or scale
define behaviour necessary for job effectiveness, and measure the
extent to which each employee exhibits it

Ranking and Rating

Comparative ranking
Rank indivs against each other on assessments of
performanc, traits or competence
Comparison could be holistic (straight ranking), or
criterion by criterion (alternation ranking)
Forced Ranking
Like straight ranking order employees top to bottom
Potentially, then yank the bottom out! (Rank and
Yank)
Forced Distribution
Performance assessments moderated into a bell
curve assign indivs to grades

Trait-Based Appraisal
Identify individual characteristics (factors) that are
likely to result in high performance.
What is the basis for the claim?

(Initiative? Enterprise? Sense of Humour?

Cooperativeness? Proactivity?)
Difficult to measure
Each factor is scored on Graphic Rating Scale, usually 4, or
5 levels, from unsatisfactory to outstanding

Difficulty:
How possible and fair is it to score ie assign a number to
traits?
Traits cant be seen, they are only inferred from behaviour
(could be image management)
Problems of rater bias and error enter in

Behaviour Based Appraisal

Behaviour Observation Scale, or Behaviourally
Anchored Rating Scale (BARS)
Almost
never

Rarely

Some
times

Usually

Almost
always

Listens, ustands
customer needs

Communicates
confidently

Communicates
persuasively to
Get results

0-24% of time

25-44% of
time

45-64% of
time

65-94% of
time

95-100% of
time

Behaviour

Scale

Behaviourally-Anchored Rating Scales

(BARS).
- Provide specific examples, or anchors, to illustrate
and describe each behavioural criterion for specific
jobs
- Maximises inter rater reliability by providing all
assessors with a consistent set of behavioural
definitions
Examples of Anchors:
-
-
-
-

Listens well
Conveys confidence when communicating
Expresses ideas clearly and directly
Misunderstands customer needs

Goal Setting
Setting specific goals
is more likely to lead to higher performance than non
specific ones (like improve your attitude)
Goals that are perceived to be difficult to achieve (but not
impossible!) result in better performance.
Employee participation in goal setting tends to lead to
higher goals being set than when the manager unilaterally
sets the goals.
Frequent performance feedback results in higher
performance.

Sources of information for appraisal

Peer Assessment (360 degree)

Subordinates (bottom up)
Self Assessment
External customers or clients
Routine use of customer information (but limited)
Mystery shopper possibly unethical

Multisource Assessment
The greater the number, the more accurate it will
be! ??
Alternative sources decreases unreliability ??

Sources of Error in Appraisal

Intentional Errors
Persecution, harshness error
Favouritism, leniency error
subordinates performance may reflect on own
performance!

Unintentional Errors

Halo and Horns

Recency
Contrast
Similarity
Central Tendency

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3. Considerations in Delivering a
Performance Appraisal
Two potentially conflicting goals
Developmental
The identification of training and development needs

Judgmental
Make a rating and/or ranking
When the latter is the basis for remuneration, the
employee has an interest in inflating it and in
disguising performance gaps

The Supervisor and the PA Interview

> Importance of supervisor training in the conduct of PM
interviews
how to deliver negative feedback in a non-threatening manner
depersonalise it, talk about criteria (presupposes criteria that are
accepted) and behaviours (not traits too personal)
Key feedback should be developmental and PA interview can
be an occasion for individual and org learning
But presumes knowledge of the employees work and a bit of
time

https://www.youtube.com/watch?v=SYRcgXlkL-s [7mins]
dangers
See Kramar, p. 357 for examples

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Insights from Motivation Theory (1) Expectancy

Theory
Extent to which Perf Mgt affects work behaviour depends on
the indivs expectations of likely consequences
Valence (reward attractiveness: how much do I want
this?)
Instrumentality (perceived performance-reward linkage)
line of sight (andwill they deliver it?)
Expectancy (effort-performance linkage) (can I achieve
the required performance with the skills and resources at
my disposal?)
A performance-contingent reward will be effective only if the
link between effort and reward is clear and the value of the
promised reward is seen to be worth the extra effort.

Insights from Motivation Theory (2) Equity

Theory
Employees want to be treated fairly.
Perceived inequity produces tension within the
individual.
This may entail revising their psychological
contract
Procedural justice
Was the process of PM and Perf Related Pay
fair?
3 features
Adequate notice, fair hearing, judgement based on
evidence.

Distributive justice
Were the outcomes fair?

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Distributive Justice
Distribution of rewards should be felt to be fair, if it is to be a
positive motivator
Rewards should be commensurate with the effort made
(input/output ratio)
And should be proportionate to a comparator
Comparable worth : People doing the same job should
receive the same pay.
And the people compared should be comparable
(qualifications?)
ie the comparison should be on the basis of employment
relevant conditions (not paid differently because of
gender or race)
If the psychological contract is to remain intact
Also Interactional Justice respect, no bullying
https://www.youtube.com/watch?v=lSRFyIl-ihc [7 mins]

Table 10.2 Categories of perceived

fairness and implications for performance
management systems

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A good appraisal system:

n
n
n
n

n
n
n
n

clarifies tasks and goals

focuses on tasks over which employee has control
identifies training needs
Is covered by a performance agreement
Which ensures that discontent employees have an appeal
process
ensures that supervisors give regular and constructive
feedback
involves employees in defining performance goals
Ensures appraisers are trained in appraisal methods and
sources of bias
Avoids interactional injustice (bullying, domination)

Conclusion
Performance appraisal is one of the central
processes for HRM
Importance of felt fairness and perceived equity
as a key motivator
Importance of feedback and skill at PA or it can go
wrong
Importance of supervisor training to avoid pitfalls,
especially bullying.

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