Read “Case Study 4-2 Choosing a Performance Management Approach at Show Me the Money.” at the end of Chapter 4 of the Performance Management textbook (page 119).
• Based on the case study, assess whether Show Me the Money should use a behavior approach, a results approach, or a combination of both to measure performance.
• Explain why you chose the approach you did.
Justify and support your responses. Be sure to draw from, explore, and cite credible reference materials. In responding to your classmates’ posts, note whether you agree or disagree with their assessments. Why or why not?
Chapter 5
Measuring Results
and
Behaviors
5-1
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Key Questions
Where should each individual focus their efforts?
What are the expected standards?
How do we know how well the results were achieved?
5-2
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Measuring Results: Overview
Accountabilities
Objectives
Performance Standards
5-3
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Accountabilities
Broad areas of a job for which an employee is responsible for producing results
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Determining Accountabilities
Collect information about the job (Job Description)
Determine importance of task or cluster of tasks
Percentage of employee’s time spent performing tasks
Impact on the unit’s mission if performed inadequately
Consequences of error
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Objectives
Statements of important and measurable outcomes, that, when accomplished, will help ensure success for the accountability
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Determining Objectives
Purpose is to identify outcomes:
Limited in number
Highly important
Achieving them will have a dramatic impact on overall organization success
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Characteristics of Good Objectives
5-8
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Setting SMART Objectives
What are the benefits of using SMART objectives?
Choose a short-term personal or professional goal and frame the objective using the SMART technique
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SMART Objectives
Performance Standards
Yardstick used to evaluate how well employees have achieved objectives
Information about what to look for to determine the level of performance that has been achieved
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Performance Standards
Aspects of performance objectives:
Quality
How well the objective is achieved
Quantity
How much, how many, how often, and at what cost?
Time
Due dates, schedule, cycle times, and how quickly?
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Standards Must Include
An Action
The Desired Result
A Due Date
A Quality or Quantity Indicator
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Good Performance Standards
5-13
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Measuring Behaviors: Overview
Identify Competencies
Identify Indicators
Choose Measurement System
5-14
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Identify Competencies
Measurable clusters of KSAs
Knowledge
Skills
Abilities
Critical in determining how results will be achieved
5-15
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Company Spotlight
Xerox Capital Services (XCS) used leadership competencies to create leadership development program
Steps followed:
Senior managers and leaders identified the 12 most critical competencies for success at XCS
12-week curriculum developed with readings and course material
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Types of Competencies
Differentiating
Distinguish between superior and average performance
Threshold
Needed to perform to minimum standard
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Identify Indicators
Observable behaviors
Used to measure the extent to which competencies are present or not
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Necessary Components for
Describing Competencies
Definition of competency
Description of specific behaviors
When competency is demonstrated
When competency is not demonstrated
Suggestions for developing the competency
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Choose a Measurement System
Comparative system
Compares employees with one another
Absolute system
Compares employees with pre-specified performance standards
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Choose a Measurement System
5-21
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Types of Comparative Systems
Simple rank order
Alternation rank order
Paired comparisons
Relative percentile
Forced distribution
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Simple Rank Order
Advantages:
Simple and easy to do
Results are clear
Disadvantages:
Judges performance based on one dimension only
May be difficult to rank similar performance levels
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Alternation Rank Order
Advantages:
Simple and easy to do
Results are clear
Uses two anchors (best and worst)
Disadvantages:
Judges performance based on one dimension only
May be difficult to rank similar performance levels
Does not specify threshold for acceptable performance
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Paired Comparisons
Advantages:
Thorough
Final rankings are more accurate
Disadvantages:
Very time consuming
May encounter problem of comparing “apples and oranges”
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Relative Percentile
Advantages:
Simple and easy to use
Evaluates specific competencies or overall performance
Disadvantages:
May be difficult to consider all ratees at the same time
Time consuming if using several scales for different competencies
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Relative Percentile
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Example of Relative Percentile Method Scale
Don
Desiree
Heather
Forced Distribution
Advantages:
Categorizes employees into specific performance groups
Facilitates reward assessment
Competition may be good for organizational performance
Disadvantages:
Assumes performance scores are normally distributed
May discourage contextual performance and teamwork
5-28
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Company Spotlight
General Electric (GE) has moved from forced distribution ratings to a more performance management approach
Changes include:
An app-based system to provide ongoing coaching
Evaluating employees relative to desired traits
5-29
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Forced Distributions
Why might forced distributions demotivate employees?
How have forced distributions evolved over the years?
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Forced Distribution
Advantages of Comparative Systems
Easy to explain
Straightforward: Identifies top as well as underperformers
Better control for biases and errors found in absolute systems: Leniency, Severity, and Central tendency
Beneficial for jobs that are very autonomous
Attracts individuals high in cognitive abilities
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Disadvantages of Comparative Systems
Rankings may not be specific enough for:
Useful feedback
Protection from legal challenge
No information on relative distance between employees
Specific issues with forced distribution method
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Company Spotlight
Deloitte abandoned forced distribution ratings in favor of a system that provides feedback on a project or quarterly basis
Changes include:
Documented, weekly “check-ins” with employees
Supervisor training on how to evaluate performance
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Nature of Performance Distribution
Forced distribution implies that performance is normally distributed
Recent research shows that, instead, performance is distributed following a heavy-tail
That is,
There are more star performers
Differences between top and average performers are much greater
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Nature of Performance Distribution
What does the “myth of the bell curve” refer to?
Under what situations are traditional assumptions of performance more likely to hold?
5-35
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Nature of Performance Distribution
5-36
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Nature of Performance Distribution
Producing Star Performers
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Identify and eliminate situational constraints
Allow star performers to rotate across teams
Invest sufficient resources in star performers
Attend to stars developmental network
Shield from financial challenges
Give them preferential treatment, but explain why to all workers
Invest disproportionate amount of resources in stars
Absolute Systems
Essays
Behavior checklists
Critical incidents
Graphic rating scales
5-38
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Behavior Checklists
Advantages:
Easy to use and understand
Provides quantitative information
Widespread use
More objective than other systems
Disadvantages:
May feel impersonal and disconnected
Scale points used are often arbitrary
Difficult to get detailed and useful feedback
5-39
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Behavior Checklists
5-40
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Example of Behavior Checklist Item
Essays
Advantages:
Simplest absolute method
Individualized for each employee
Can be done anytime
Potential for detailed feedback
Disadvantages:
Unstructured and may lack detail
Depends on supervisor’s writing skill
Comparisons virtually impossible
Lack of quantitative information; difficult to use in personnel decisions
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Critical Incidents
Advantages:
Focus on actual job behavior
Provides specific examples
Employees identify with rating
Disadvantages:
Collecting critical incidents can be very time consuming
Quantification is difficult
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Critical Incidents
5-43
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Example of Critical Incidents for Adaptability/Flexibility
Graphic Rating Scales
Advantages:
Meanings, interpretations, and dimensions being rated are clear
Useful and accurate
Most popular tool
Disadvantages:
Time consuming and resource-laden to develop
Lacks individualized feedback and recommendations
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Graphic Rating Scales:
BARS Improvement
Behaviorally Anchored Rating Scales (BARS)
Uses critical incidents as anchors
Involves multiple groups of employees in development
Identify important job elements
Describe critical incidents at various levels of performance
Check for inter-rater reliability
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BARS Improvement
5-46
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Example of BARS Improvement scale
Advantages and Disadvantages of Absolute Systems
Advantages:
Can be used in large and small organizations
Evaluations more widely accepted by employees
Disadvantages:
Higher risk of leniency, severity, and central tendency biases
Generally more time consuming than comparative systems
5-47
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Role of Context
Plays important role in determining how performance is measured
Examples
Competitive versus Collaborative
Value of long-term relationships with customers
Industry Trends
Leadership
5-48
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Measuring Performance
Several types of methods
Differ in terms of:
Practicality (time and effort)
Usefulness (quantifiable)
5-49
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Quick Review
Measuring Results
Determine Accountabilities
Determine Objectives
Determine Performance Standards
Measuring Behaviors
Comparative Systems
Nature of the Performance Distribution
Absolute Systems
Role of Context
5-50
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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51
Part II: System Implementation
Chapter 4: Defining Performance and Choosing a Measurement Approach
Chapter 5: Measuring Results and Behaviors
Chapter 6: Performance Analytics
Chapter 7: Rolling Out the Performance Management System
Copyright © 2019 Chicago Business Press
4-1
Chapter 4
Defining Performance
and
Choosing a Measurement Approach
Copyright © 2019 Chicago Business Press
4-2
2
Overview
Defining Performance
Determinants of Performance
Performance Dimensions
Approaches to Measuring Performance
Copyright © 2019 Chicago Business Press
4-3
Company Spotlight
Sprint uses five core dimensions to define what successful performance looks like
Both task and contextual performance are measured
Includes:
Employees write behavioral examples of how they have performed on each dimension
Employees are evaluated not only on results, but also on how they are achieved through working with others
Copyright © 2019 Chicago Business Press
4
Defining Performance
Performance is:
Behaviors and actions
What employees do
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4-5
Defining Performance
Performance is:
Results and Products
The outcome of employee behaviors
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4-6
Defining Performance
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4-7
Behaviors Labeled as Performance Are…
Evaluative
Negative
Neutral
Positive
Multidimensional
Many different kinds of behaviors
Advance or hinder organizational goals
Copyright © 2019 Chicago Business Press
4-8
Behaviors Are NOT Always…
Observable
Measurable
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4-9
Results or Products May Be Used…
To infer behavior
As proxy for behavioral measure
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4-10
Determinants of Performance
Performance =
Abilities and other traits
X
Knowledge and skills
X
Context
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4-11
Determinants of Performance
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4-12
Abilities and Other Traits
Cognitive Abilities
Personality
Stable Motivational Dispositions
Physical Characteristics and Abilities
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4-13
Knowledge and Skills
Job-Related Knowledge
Skills, Attitudes and Malleable Motivational States
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4-14
Declarative Knowledge
Information about
Facts
Labels
Principles
Goals
Understanding of task requirements
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4-15
Procedural Knowledge
Knowing
What to do
How to do it
Skills
Cognitive
Physical
Perceptual
Motor
Interpersonal
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4-16
Context
HR Policies and Procedures (e.g., compensation system)
Managerial and Peer Leadership
Organizational and National Culture
Issues about time and timing of performance
Resources and opportunities given to employees
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4-17
Abilities and Other Traits, and Knowledge and Skills
Knowledge and Skills are more malleable (i.e., easier to change)
Individual differences that are easier to change through interventions are called “states”
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4-18
Motivation
Choices
Expenditure of effort (”state” motivation)
Level of effort (“state” motivation)
Persistence of effort (stable trait)
Deliberate practice leads to excellence
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4-19
Deliberate Practice
Approach performance with goal of getting better and better
Focus on performance
What is happening?
Why?
Seek feedback from expert sources
Build mental models of job, situation, and organization
Repeat first four steps on an ongoing basis
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4-20
Deliberate Practice
What are some of the tips to perform deliberate practice well?
What are some of the benefits of deliberate practice?
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4-21
Context
HR policies and procedures
Managerial and peer leadership
Organizational and national culture
Time and timing of performance
Resources given to employees
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4-22
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
Copyright © 2019 Chicago Business Press
4-23
Performance Dimensions:
Types of Multidimensional Behaviors
Task performance
Contextual performance
Prosocial behaviors
Organizational citizenship
Counterproductive performance
Adaptive Performance
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4-24
Task Performance
Activities that
Transform raw materials
Help with the transformation process
Replenishing
Distributing
Supporting
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4-25
25
Contextual Performance
Behaviors that
Contribute to the organization’s effectiveness
AND
Provide a good environment in which task performance can occur
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4-26
26
Differences Between
Task and Contextual Performance
Task Performance
Varies across jobs
Likely to be role prescribed
Influenced by
Abilities
Skills
Contextual Performance
Fairly similar across jobs
Not likely to be role prescribed
Influenced by
Personality
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4-27
Why Include Task and Contextual
Performance Dimensions in PM System?
Global competition
Customer service
Teamwork
Employee perceptions of PM
Supervisor views
Cultural differences
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4-28
Voice Behavior
Behavior that emphasizes expression of constructive challenge with the goal to improve rather than merely criticize
Challenges the status quo in a positive way
Makes innovative suggestions for change
Recommends modifications to standard procedures
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4-29
Counterproductive Performance
Behaviors and results that are voluntary
and violate organizational norms
Threaten well-being of the organization, its members, or both
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4-30
Examples of counterproductive performance
Exaggerating hours worked
Gossiping about coworkers and one’s supervisor
Cyberloafing
Intentionally working slowly and carelessly
Staying out of sight to avoid work
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4-31
Adaptive Performance
Related to an individual’s adaptability to changes
Be it in the organization and it’s goals,
in the requirements of the job,
or the overall work context
Becoming increasingly important due to rapid changes
Copyright © 2019 Chicago Business Press
4-32
Examples of adaptive performance
Handling emergencies
Solving problems creatively
Dealing with uncertain and unpredictable work situations
Demonstrating interpersonal adaptability
Demonstrating cultural adaptability
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4-33
Approaches to Measuring Performance
Behavior Approach
Emphasizes how employees do the job
Results Approach
Emphasizes what employees produce
Copyright © 2019 Chicago Business Press
4-34
Behavior Approach
Appropriate if…
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
Copyright © 2019 Chicago Business Press
4-35
Company Spotlight
Dollar General uses a behavioral approach to measure performance
Identified behaviors that serve as indicators of underlying competencies
Behaviors are reviewed and utilized to encourage certain outcomes and provide
feedback and rewards to staff members
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36
Results Approach
Advantages:
Less time
Lower cost
Data appear objective
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
Copyright © 2019 Chicago Business Press
4-37
Company Spotlight
Basecamp divides its employees workload into six-week work cycles containing 1-2 “big batch projects” and 4-8 “small batch projects”
Uses a results-approach to performance planning
Company focuses exclusively on getting the project done within 6 weeks and does not measure efficiency or compare actual to estimated costs
Team decides how to get the project done
Copyright © 2019 Chicago Business Press
4-38
Measuring Performance
What kind of approach to measuring performance is used at Pfizer?
How is the focus on measuring performance based on patient figures different than sales figures? What are some of the benefits of this approach?
Is this an appropriate approach to measuring performance for Pfizer? Why or why not?
Copyright © 2019 Chicago Business Press
4-39
Quick Review
Defining Performance
Determinants of Performance
Performance Dimensions
Approaches to Measuring Performance
Copyright © 2019 Chicago Business Press
4-40
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
Copyright © 2019 Chicago Business Press
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