1. Describe how deeply embedded are these processes in the company’s mission and vision, marketing niche, competitive advantage, business strategy and human resource management strategy for the company Google and how they use Performance Management (Pay for Performance). Connect Google to class material. Times New Roman font, 12 pt. single spaced. 2. Class material will be in the power point provided in the files. Attached will be a document of company overview and links to websites where you could find information as well.- Deep dive into company performance management and pay for performance3. Also create a power point 2-3 slides talking about Pay for performance for the company.
noe11e_ch_08_final_performance_management_students.pptx

noe11e_ch_12_final_recognizing_employee_performance_with_pay_student.pptx

company_overview.docx

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HRER 417
Managing and Motivating Employees
Professor
Dennis J. Nirtaut
Human Resources &
Employment Relations
Chapter 8 Performance Management
Quinlan School of Business
Dennis J. Nirtaut
Human Resources & Employment Relations (HRER)
Quinlan School of Business
Loyola University Chicago
Schreiber Center – Room 515
16 East Pearson, Chicago, IL 60611
dnirtaut@luc.edu
312-915-6611
Twitter: @DennisNirtaut
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter 8
Performance Management
©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Learning Objectives 1 of 2
LO8-1 Identify the major parts of an effective performance
management process.
LO8-2 Discuss the three general purposes of performance
management.
LO8-3 Identify the five criteria for effective performance
management systems.
LO8-4 Discuss the five approaches to performance
management, the specific techniques used in each
approach, and the way these approaches compare
with the criteria for effective performance
management systems.
LO8-5 Choose the most effective approach to performance
measurement for a given situation.
©McGraw-Hill Education
Learning Objectives 2 of 2
LO8-6 Discuss the advantages and disadvantages of the
different sources of performance information.
LO8-7 Choose the most effective source(s) for
performance information for any situation.
LO8-8 Discuss the potential advantages of social
performance management and electronic
monitoring for performance management.
LO8-9 Distinguish types of rating errors, and explain how
to minimize each in a performance evaluation.
LO8-10 Conduct an effective performance feedback
session.
LO8-11 Identify the cause of a performance problem.
©McGraw-Hill Education
Quotes
“What you measure and reward you will get more of…..a
widely accepted premise that is well supported by behavioral
research.”
Robert J. Greene
“The process of performance appraisal “nourishes short-term
performance, annihilates long term planning, builds fear,
demolishes teamwork, nourishes rivalry and politics…..it
leaves people bitter, crushed, bruised, battered, desolate,
despondent, dejected, feeling inferior, some even depressed,
unfit for work for weeks after receipt of rating, unable to
comprehend why they are inferior. It is unfair as it ascribes to
the people in a group differences that may be caused totally by
the system they work in.”
W. Edwards Deming
©McGraw-Hill Education
Impact of Effective
Performance Manag ement
22%
higher shareholder
return from effective PM (Source: McKinsey)
$20-40K
additional value per
employee if use PM effectively (Source: Stanford)
300x
productivity of
top vs average
Performers (Source: Google)
©McGraw-Hill Education
Introduction
Performance Management
• Ensure employee activities are congruent with goals
Performance Appraisal
• Organization gets information on how well an
employee is doing his or her job
Performance Feedback
• Provide employees information on their performance
©McGraw-Hill Education
The Practice of Performance Management
Performance management is a prevalent practice,
but often not valued or used effectively.
• Many managers don’t consider yearly performance
evaluations useful
• Half of employees are surprised by their ratings
• Most employees are unhappy because they
expected a higher rating
©McGraw-Hill Education
Figure 8.1 Model of the Effective Performance
Management Process
©McGraw-Hill Education
THE PROCESS OF PERFORMANCE
MANAGEMENT
Six Steps
The Process of Performance Management
Step 1

Understand and identify important performance
outcomes or results

Align goals and behaviors to organization’s
strategies and goals
Step 2
• Understand the process (or how) to achieve the
goals established in the first step
• Identifying measurable goals, behaviors, and activities
that will help employees achieve the performance results
• Make these part of the employees’ job descriptions
©McGraw-Hill Education
The Process of Performance Management
Step 3
• Provide employees with training, necessary
resources and tools, and frequent feedback
• Focus on accomplishments as well as issues and
challenges influencing performance
Step 4
The manager and the employee discuss and
compare the targeted performance goals and
supporting behaviors with the actual results
Annual or biannual formal performance review
©McGraw-Hill Education
The Process of Performance Management
Step 5
• Identify what the employee can do to capitalize on
performance strengths and address weaknesses
Step 6

©McGraw-Hill Education
Provide consequences for achieving (or failing to
achieve) performance outcomes
PURPOSES OF PERFORMANCE
MANAGEMENT
STRATEGIC
ADMINISTRATIVE
DEVELOPMENTAL
Purposes of Performance Management 1 of 3
Strategic Purpose

LO 8-2
©McGraw-Hill Education
Performance management system should link
employee activities with the organization’s goals

Define the results, behaviors, and employee
characteristics that are necessary for carrying
out those strategies, and then

Develop measurement and feedback systems
Purposes of Performance Management 2 of 3
Administrative Purpose
• Performance management information used for
salary decisions, promotions, retention-termination,
layoffs, and recognition of individual performance
• Managers tend to be uncomfortable rating
employees
©McGraw-Hill Education
Purposes of Performance Management 3 of 3
Developmental Purpose
• Improve the performance of employees
• Includes deficiencies and the causes of
deficiencies
• Helps good performers get training and
opportunities
©McGraw-Hill Education
PERFORMANCE MEASURES CRITERIA
CONGRUENCE
VALIDITY
RELIABILITY
ACCEPTABILITY
SPECIFICITY
Performance Measures Criteria 1 of 6
Strategic Congruence
LO 8-3
©McGraw-Hill Education

Emphasizes the need for the performance
management system to guide employees in
contributing to the organization’s success

Must be flexible to adapt to change

Critical success factors (CSFs)
Performance Measures Criteria 3 of 6
Validity
• Must not be deficient or contaminated
• It is deficient if it does not measure all aspects
of performance
• It is contaminated if it evaluates irrelevant
aspects of performance or aspects that are not
job related
• Concerned with maximizing the overlap between
actual job performance and the measure of job
performance
©McGraw-Hill Education
Figure 8.2 Contamination and Deficiency of
a Job Performance Measure
©McGraw-Hill Education
Performance Measures Criteria 4 of 6
Reliability
• Interrater reliability
• The consistency among the individuals who evaluate the
employee’s performance
• Test-retest reliability
• Should be reliable over time
©McGraw-Hill Education
Performance Measures Criteria 5 of 6
Acceptability
• May take too much time or not be accepted as fair
• Three categories of fairness: procedural, interpersonal,
and outcome
©McGraw-Hill Education
Table 8.2 Categories of Perceived Fairness and
Implications for Performance Management Systems
FAIRNESS
CATEGORY
Procedural
fairness
IMPORTANCE
FOR
PERFORMANCE
MANAGEMENT
SYSTEM
Development
IMPLICATIONS
• Give managers and employees opportunity to
participate in development of system
• Ensure consistent standards when evaluating
different employees
• Minimize rating errors and biases
Interpersonal Use
fairness
• Give timely and complete feedback
• Allow employees to challenge the evaluation
• Provide feedback in an atmosphere of respect
and courtesy
Outcome
fairness
• Communicate expectations regarding
performance evaluations and standards
• Communicate expectations regarding rewards
©McGraw-Hill Education
Outcomes
Performance Measures Criteria 6 of 6
Specificity
• Relevant to both strategic and developmental
purposes
• Must measure what an employee must do to
achieve company’s goals
• Must point out employee’s performance problems
©McGraw-Hill Education
Approaches to Measuring Performance
The Comparative Approach
The Attribute Approach
The Behavioral Approach
The Results Approach
©McGraw-Hill Education
Approaches to Measuring Performance 1
The Comparative Approach

LO 8-4
©McGraw-Hill Education
Ranking

Simple ranking – highest performer to poorest
performer

Alternation ranking – cross one name off the list
at a time
Approaches to Measuring Performance 2
The Comparative Approach continued

©McGraw-Hill Education
Forced distribution

Employees ranked in predetermined categories

Helps managers tailor development activities to
employees based on their performance

Ethical if the system is clearly communicated, the
system is part of a positive dimension of the
organization’s culture, and the employees have the
chance to appeal decisions
Forced Distributions & Culture
Highest Users
Country
% of
Companies
Portugal
India
China
South Korea
62%
61%
58%
58%
Lowest Users
Country
% of
Companies
Italy
11%
Australia
US
13%
15%
Why are the 4 countries significant users of “forced
distributions” and the 3 countries minimal users?
Source: Mercer’s Global Performance Management Survey
31
©McGraw-Hill Education
Table 8.3 Performance and Development Based
on Forced Distribution and Ranking
RANKING OR
DISTRIBUTION
CATEGORY
PERFORMANCE AND DEVELOPMENT PLAN
A
Above average
Exceptional
A1 performer






Accelerate development through challenging job assignments
Provide mentor from leadership team
Recognize and reward contributions
Praise employee for strengths
Consider leadership potential
Nominate for leadership development programs
B
Average
Meets expectations
Steady performer


Offer feedback on how B can become a high performer
Encourage development of strengths and improvement of
weaknesses
Recognize and reward employee contributions
Consider enlarging job
C
Below expectations
Poor performance





Give feedback and agree upon what specific skills, behavior, and/or
results need to be improved, with timetable for accomplishment
Move to job that better matches skills
Ask to leave the company
Based on B. Axelrod, H. Handfield-Jones, and E. Michaels, “A New Game Plan for C Players,” HBR, January 2002, pp. 80–88; Walker, “Is Performance Management
as Simple as ABC?” T + D, February 2007, pp. 54–57; T. De Long and V. Vijayaraghavan, “Let’s Hear It for B Players,” HBR, June 2003, pp. 96–102.
©McGraw-Hill Education
Approaches to Measuring Performance 3
The Comparative Approach continued
• Paired comparison

©McGraw-Hill Education
Tends to be time consuming
Approaches to Measuring Performance 4
The Comparative Approach continued

©McGraw-Hill Education
Evaluating the Comparative Approach

Virtually eliminates problems of leniency, central
tendency, and strictness

Problems

Often not linked to strategic goals

Validity and reliability depend on the raters
themselves

Individuals are completely unaware of what they
must do differently to improve their ranking

Employees and managers are less likely to
accept evaluations
Approaches to Measuring Performance 5
The Attribute Approach

©McGraw-Hill Education
Graphic Rating Scales

Evaluate a list of traits on a five-point scale

Can be discrete scale or continuous scale
Approaches to Measuring Performance 6
The Attribute Approach continued

Mixed-Standard Scales
• Define the relevant performance dimensions and then
develop statements representing good, average, and
poor performance along each dimension
• These statements are then mixed with the statements
from other dimensions on the actual rating instrument
©McGraw-Hill Education
Approaches to Measuring Performance 7
The Attribute Approach continued

©McGraw-Hill Education
Evaluating the attribute approach

Easy to develop and generalizable

Problems

Usually little congruence between the techniques
and the company’s strategy

Usually have vague performance standards that are
open to different interpretations by different raters
Approaches to Measuring Performance 8
The Behavioral Approach
• Behaviorally anchored rating scales (BARS)
• Can increase interrater reliability
• Can bias information recall
©McGraw-Hill Education
Behaviorally Anchored Rating Scales
(BARS) Example
Dimension: Classroom Teaching Skills
Outstanding
Fair
Extremely Poor
©McGraw-Hill Education
7
The instructor answers student’s questions clear,
concise & accurate manner
6
The instructor uses examples when trying to
emphasize a point
5
The instructor speaks in a clear, understandable
manner
4
The instructor exhibits a number of annoying
habits when lecturing
3
The instructor singles out students in a class for
unreasonable criticism.
2
The instructor explains important concepts in a
confusing manner
1
The instructor plays favorites when grading
exams & papers
Approaches to Measuring Performance 9
The Behavioral Approach continued
• Behavioral Observation Scales (BOS)
• May require more information than most managers can
process or remember
©McGraw-Hill Education
Behavior observation scales (BOS)
Leadership
RATING
ACTION
5
Keep employees abreast of information they need to do their jobs.
3
Gives feedback in a constructive and timely manner.
4
Allocates decision making at the appropriate level.
3
Acts in a way to build team trust & commitment.
3
Supports team activities and decisions.
4
Seeks feedback and input from team members
5
Adheres to the team performance management process.
Rating Scale:
5=Always 4=Usually 3=Sometimes 2=Occasionally
1=Rarely or never
©McGraw-Hill Education
Approaches to Measuring Performance 10
The Behavioral Approach continued
• Competency Models
• Useful for a variety of HR practices including recruiting,
selection, training, and development
• Can be used to help identify the best employees to fill
open positions
• Can be used as the foundation for development plans
that allow the employee and the manager to target
specific strengths and development areas
• Must be up-to-date, drive business performance, be job
related, be relevant for all of the company’s business
units, and provide sufficient detail to make an accurate
assessment of employees’ performance
©McGraw-Hill Education
Approaches to Measuring Performance 11
The Behavioral Approach continued
• Evaluation of the behavioral approach
• Can link the company’s strategy to the specific behavior
necessary for implementing that strategy
• Provides specific guidance and feedback for employees
about the performance expected of them
• Acceptability and reliability are high
• Weaknesses
• Behaviors and measures must be continually
monitored and revised
• Assumes that there is “one best way” to do the job
and that the behaviors that constitute this best way
can be identified
©McGraw-Hill Education
Approaches to Measuring Performance 12
The Results Approach
• The Use of Objectives
• Managers set goals that are used as standards to
evaluate individuals’ performance
• Results-based systems have three common components
• Require setting effective goals (SMART)
• Different types of measurements can be used for goals or
objectives
• Goals usually set with managers’ and subordinates’
participation
©McGraw-Hill Education
Table 8.9 Best Practices in Goal Setting
1. Employees and managers should discuss and set no
more than three to five goals.
2. Goals should be brief, meaningful, challenging, and
include the results the employee is expected to achieve.
3. The time frame for goal achievement should be related
to when they are expected to be accomplished.
4. The relationship between goals and rewards should be
appropriate.
5. Goals should be “linked up” rather than “cascaded
down.” This means that functions, teams, and
employees should set their own goals that are related to
company goals.
©McGraw-Hill Education
Employees Want a Lot More From Their Manager, GALLUP BUSINESS
JOURNAL,
APRIL 8, 2015 by Jim Harter and Amy Adkins
©McGraw-Hill
Education
Approaches to Measuring Performance 13
The Results Approach continued
• Balanced Scorecard
• Four perspectives of performance
• Financial
• Customer
• Internal or operations
• Learning and growth
©McGraw-Hill Education
Approaches to Measuring Performance 14
The Results Approach continued
• Evaluation of the Results Approach
• Minimizes subjectivity
• Links an individual’s results with the organization’s
strategies and goals
• Challenges
• Can be both contaminated and deficient
• Individuals may focus only on aspects of their
performance that are measured, neglecting those that
are not
• Feedback may not help employees learn how they
need to change their behavior to increase their
performance
©McGraw-Hill Education
Choosing a Source for Performance
Managers
Peers
Subordinates/Direct Reports
Self
Customers
©McGraw-Hill Education
Choosing a Source for Performance
Information
360-Degree Appraisal
• Multiple raters (boss, peers, subordinates,
customers) provide input into a manager’s
evaluation.
• Minimizes bias
©McGraw-Hill Education
Table 8.12 Typical Rater Errors
RATER ERROR
DESCRIPTION
Similar to me
Individuals who are similar to us in race, gender, background,
interest, beliefs, and the like receive higher ratings than those
who are not.
Contrast
Ratings are influenced by comparison between individuals
instead of an objective standard (e.g., employee receives lowerthan-deserved ratings because he or she is compared to
outstanding peers).
Leniency
Rater gives high ratings to all employees regardless of their
performance.
Strictness
Rater gives low ratings to all employees regardless of their
performance.
Central tendency
Rater gives middle or average ratings to all employees despite
their performance.
Halo
Rater gives employee high ratings on all aspects of performance
because of an overall positive impression of the employee.
Horns
Rater gives employee low ratings on all aspects of performance
because of an overall negative impression of the employee.
©McGraw-Hill Education
Reducing Rater Errors
Reducing Rater Errors, Politics, and Increasing
Reliability and Validity of Ratings
• Reducing errors
• Error training
• Frame-of-reference training
• Unconscious bias training
• Calibration meetings
©McGraw-Hill Education
Performance Feedback
The Manager’s Role in an Effective Performance
Feedback Process









LO 8-10
©McGraw-Hill Education
Feedback Should Be Given Frequently, Not Once a Year
Create the Right Context for the Discussion.
Ask the Employee to Rate His or Her Performance before
the Session.
Have Ongoing, Collaborative Performance Conversations.
Recognize Effective Performance through Praise.
Focus on Solving Problems.
Focus Feedback on Behavior or Results, Not on the Person.
Minimize Criticism.
Agree to Specific Goals and Set a Date to Review Progress.
©McGraw-Hill Education
What Managers Can Do to Diagnose
Performance Problems and Manage Employees’
Performance 1 of 2
Diagnosing the Causes of Poor Performance

Consider whether the poor performance is
detrimental to the business

Determine the cause

Meet with the employee
LO 8-11
©McGraw-Hill Education
What Managers Can Do to Diagnose
Performance Problems and Manage Employees’
Performance 2 of 2
Actions for Managing Employees’ Performance
• Take into account employees’ ability, motivation, or
both
• Solid perf …
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