Strategic Human Resource Management - Performance management and feedback - Ch-9

1. PERFORMANCE MANAGEMENT AND FEEDBACK
By: Dimpy Chugh (1833)
Drishti Bhalla (1838)
An organisation’s long term success in meeting its strategic objectives rests with its ability to
manage employee performance and ensure that performance measures are consistent with the
organization’s needs.
Performance Management is a process by which managers and employees work together to plan,
monitor and review an employee’s work and overall contribution to the organization.
Performance Management Timeline
Past Present Future
Data related to past allows work plans, goals and resulting in the
Performance development opportunities to be set achievements of objectives
WHY PERFORMANCE MANAGEMENT?
A performance management system can serve multiple purposes like-
• Facilitate Employee Development- By assessing deficiencies in performance levels and
skills, an organization can determine specific training and development needs.
• Determine Rewards and Compensation- Salary, promotions, retention and bonus decisions
are based on the data collected as a part of performance measurement.
• Enhance Employee Motivation- A process that allows for employee acknowledgment and
praise can reinforce the motivation levels that are beneficial to the organization.
• Facilitate Legal Compliance- Claims of unfair dismissal are best supported when the
organization has documentation of performance deficiencies.
• Through Performance Management, employees are provided with the appropriate and
specific feedback to assist with their career development.
• Facilitate Human Resource Planning process- Performance data alerts the organization to
deficiencies in the overall level and employee skills which is used in planning for future goals.

2. WHO EVALUATES PERFORMANCE?
Traditionally, performance evaluation was performed by the employee’s immediate supervisor which
was prone to a variety of perceptual errors. These errors include –
• Hallo Effect- In this, the rater allows one positive or negative trait or outcome to influence
other measures.
• Stereotyping or Personal Bias-In this the rater makes performance judgments based on
characteristics of employ rather than on employ performance.
• Contrast Error-In which the employee’s assessment is based on those being given to other
employees.
• Recency Error-In which the evaluation is biased towards events that happened immediately
prior to the evaluation time.
• Central Tendency Error-In this the evaluator avoids the higher and lower ends of the
performance assessment and place all employees near the middle of the scale.
• Leniency or Strictness Error-In this employees are generally all rated well above or below
the standards.
Multirater system or 360 degree system in which input and advice of others (peers, customers and
subordinates) beside the supervisor are referred also faces some challenges like-
• Feedback from peers are useful for development purposes but in organizations with
competitive cultures, peer evaluation system tends to be political and self -serving which
effects the team work.
• Customer’s feedback are most free from bias but are critical for determining appropriate
rewards being the organization’s bottom line.
• Subordinate evaluation are excellent measures of an individual’s leadership capabilities but
they suffer from the same political problem as peer evaluations.
• Collecting performance data from numerous sources results in greater economic cost and a
complex process to analyse the data to provide meaningful feedback to employees.

3. WHAT TO EVALUATE IN PERFORMANCE
MANAGEMENT?
Employee evaluations can be based on their traits, behaviour or the results or outcomes they achieve.
• Traits-Based- These measures focus on the general abilities and characteristics of the
employee like loyalty to the organization etc. They are of limited use as they ignore what the
employee actually does.
• Behaviour-Based-They focus on what an employee does by examining specific behaviours of
the employee. Factors evaluated are, the employee’s punctuality, willingness to take initiative
and ability to meet deadlines.
• Outcomes-Based-Results based measures focus on specific achievements or direct
outcomes of an employee’s work. Besides being most meaningful measures it has some
limitations- 1) It’s difficult to obtain results for certain jobs dealing with the future and hence
performance cannot be assessed.
2) Results are sometimes beyond an employee’s control, but impact the
employee’s ability to generate specific performance objectives.
3) It focus only on the outcomes while ignoring the means or process by which
the results have been obtained.
• Competency-Based-They focus on evaluating employees on the skills that have been
determined according to the organization’s strategic objectives . Some Managerial
competencies are:
 Flexible and adaptive to change
 Able to cope up with stress
 Customer service minded
 Team builder
 Creative thinker
 Open-minded

4. HOW TO EVALUATE PERFORMANCE
Performance feedback can be evaluated on an absolute or relative basis.
Absolute Measures- Employees are compared to a standard & their evaluation is independent of any
other employee in a work group.
Relative Measures- Employees are compared to co-workers and further involve slotting employees
into categories such as top 10 % of employees in work. These measures easily facilitate distorted
perceptions of performance when all employees are superior or deficient.
One popular means of relative assessment is forced ranking. Forced Ranking or forced
distribution, involves placing employees into clusters or groupings based on distribution schema.
Forced ranking systems were first pioneered by General Electric and other large employers that use
this system includes Cisco Systems, Hewlett-Packard, Microsoft, Sun Microsystems and Pepsico.
PROS AND CONS OF FORCED RANKINGS
It is the best way to identify both the highest performing employees who should receive generous
incentives, and bottom performers who should be helped up or out. It also provides data for
compensation decisions and forces managers to make tough decisions. Critics, however, argue that it
can be arbitrary, unfair and expose an organisation to lawsuits.
Forced rankings are more effective in organisations with a high-pressure, results-driven culture. It is
not appropriate for every organisation, but it is consistent with a strategic approach toward human
resource management because they emphasize differentiating employees by performance level and
investing more resources in human assets that display highest returns.
MEASURES OF EVALUATION
There are a variety of tools or formats to use in measuring performance. These include:
 Graphic Rating Scales – Relatively easy to design, use, and update as job requirements
change, they involve a scale that gives the evaluator the performance measures for traits,
behaviors, or results.

5.  Weighted Checklists – Provide the evaluator with specific criteria on which performance is
to be assessed and ask the evaluator to check those criteria that apply to the employee.
Behaviorally Anchored Rating Scale (BARS) – More specific type of graphic rating scale. The
evaluator is given specific descriptions of behaviors along a numerically rated scale and is asked to
select the behavior that most corresponds to the employee’s performance for time period being
evaluated.

6.  Behavioral Observation Scale (BOS) – Addresses the problem of inconsistent employee
performance by measuring frequencies along the scale. BOS determines which behavior of
BARS is optimal and asks for assessment of frequency with which the employee displays it.
 Critical Incident Measures – The evaluator provides specific examples of employee’s
critical behaviors or results during performance period. Evaluator maintains a diary or log
for each employee and make periodic notation of noteworthy behaviors that were effective or
ineffective.

7.  Objectives Based Measures – This process involves having employee meet with his/her
immediate supervisor prior to time period for which performance is to be assessed. The two
parties jointly agree on employee’s work objectives with negotiation. It basically involves
setting objectives consistent with organization’s strategy as well provide challenging work
assignments that are consistent with employee’s development and career aspirations.
This system results in enhanced employee motivation because employee’s are allowed to provide
input in determining their job responsibilities and discussing organisational goals to which they
contribute. Employee commitment is also enhanced as they are more expected to be committed to
objectives that they have agreed to and negotiated rather than objectives forced by the organisation.
Employee’s trust and dependability is also enhanced.
Three common oversights that inhibit the effectiveness of any objective based feedback system :-
1) setting objectives that are too vague ,
2) setting objectives that are unrealistically difficult
3) not clarifying how performance will be measured , when the objective is not quantifiable and
requires some subjectivity in evaluation.
WHY PERFORMANCE MANAGEMENT SYSTEM
OFTEN FAILS ?
 Process is too complicated and time consuming. Performance data may subject to
multiple levels of review and require collection of large amounts of data that must be
analysed and condensed.
 When salary, promotion and retention decisions are made, claims of unlawful
discrimination/legal challenges may be made by employees who did not feel appropriately
rewarded.
 Managers have little/no control over the process by which they manage their
subordinate’s performance.
 Many performance management systems are totally divorced from the reward system.
 The forms and paperwork accompanying performance management system can be lengthy
and complex.

8. STRATEGIES FOR IMPROVING THE
PERFORMANCE MANAGEMENT SYSTEM
 Involve managers in the design of the system.
 Hold managers accountable for the performance and development of their subordinates.
 Set clear expectations for performance.
 Set specific objectives and goals of the system.
 Performance measures should be clearly linked to rewards.
 Commitment to performance management system needs to be gained from senior
management.
CRITICAL GUIDELINES
IN ANY
PERFORMANCE MANAGEMENT SYSTEM
 Any feedback provided to employees should be specific rather than general.
 Feedback should only be provided from credible, trustworthy sources that have ample
opportunity and background to make an assessment of performance.
 Feedback should be provided as soon as possible after events, behaviors, or outcomes take
place to be of maximum benefit.
 Performance measures should be based on clear, measurable goals.
 The process should involve a dialogue between the employee and the manager that addresses
the most recent period and also plans for the future.