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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
PM is NOT performance appraisal
PM
Strategic business
considerations
Ongoing feedback
So employee can
improve performance
Driven by line manager
Prentice Hall, Inc. 2006
Performance appraisal
Assesses employee
Strengths &
Weaknesses
Once a year
Lacks ongoing feedback
Driven by HR
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Disadvantages/Dangers of
Poorly-implemented PM Systems
for Managers
Increased turnover
Decreased motivation to perform
Unjustified demands on managers resources
Varying and unfair standards and ratings
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Disadvantages/Dangers of
Poorly-implemented PM Systems
for Organization
Wasted time and money
Unclear ratings system
Emerging biases
Increased risk of litigation
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Reward Systems: Definition
Set of mechanisms for distributing
Tangible returns
and
Intangible or relational returns
As part of an employment relationship
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Intangible returns
Relational returns, such as
Recognition and status
Employment security
Challenging work
Learning opportunities
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Returns and Their Degree of Dependency
on the Performance Management System
Return
Cost of Living Adjustment
Income Protection
Work/life Focus
Allowances
Relational Returns
Base Pay
Contingent Pay
Short-term Incentives
Long-term Incentives
Prentice Hall, Inc. 2006
Degree of Dependency
Low
Low
Moderate
Moderate
Moderate
Moderate
High
High
High
Herman Aguinis, University of Colorado at Denver
Purposes of PM Systems:
Overview
Strategic
Administrative
Informational
Developmental
Organizational maintenance
Documentation
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Strategic Purpose
Link employee behavior with organizations
goals
Communicate most crucial business strategic
initiatives
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Administrative Purpose
Provide information for making decisions re:
Salary adjustments
Promotions
Retention or termination
Recognition of individual performance
Layoffs
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Informational Purpose
Communicate to Employees:
Expectations
What is important
How they are doing
How to improve
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Developmental Purpose
Performance feedback/coaching
Identification of individual strengths and
weaknesses
Causes of performance deficiencies
Tailor development of individual career path
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Organizational Maintenance Purpose
Plan effective workforce
Assess future training needs
Evaluate performance at organizational level
Evaluate effectiveness of HR interventions
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Documentational Purpose
Validate selection instruments
Document administrative decisions
Help meet legal requirements
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Characteristics of an Ideal PM System
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Congruent with organizational strategy
Consistent with organizations strategy
Aligned with unit and organizational goals
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Practical
Available
Easy to use
Acceptable to decision makers
Benefits outweigh costs
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Specific
Concrete and detailed guidance to
employees
whats expected
how to meet the expectations
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Identifies effective and ineffective performance
Distinguish between effective and ineffective
Behaviors
Results
Provide ability to identify employees with
various levels of performance
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Reliable
Consistent
Free of error
Inter-rater reliability
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Valid
Relevant (measures what is important)
Not deficient (doesnt measure unimportant
facets of job)
Not contaminated (only measures what the
employee can control)
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Open (No Secrets)
Frequent, ongoing evaluations and feedback
2-way communications in appraisal meeting
Clear standards, ongoing communication
Communications are factual, open, honest
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Correctable
Recognizes that human judgment is fallible
Appeals process provided
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Standardized
Ongoing training of managers to provide
Consistent evaluations across
People
Time
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
Ethical
Supervisor suppresses self-interest
Supervisor rates only where she has sufficient
information about the performance dimension
Supervisor respects employee privacy
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
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
Prentice Hall, Inc. 2006
Herman Aguinis, University of Colorado at Denver
