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Chapter 7
Managing Employee Performance
CHAPTER OVERVIEW
Effective management is always tied to the performance of followers. Therefore, the selection,
evaluation, and coaching of followers are all essential management skills. The best managers
find and select good people to work with, rigorously evaluate their performance, and provide
regular feedback to help them continually improve. This chapter integrates the best human
resource frameworks for performance management with the growing literature on feedback and
development to provide a foundation for learners to become skilled coaches.
LEARNING OBJECTIVES
KNOWING OBJECTIVES
1. Define organizational citizenship and state its importance to organizational functioning.
2. Describe the major steps in the performance-management cycle.
3. Describe the advantages and disadvantages of different methods of performance
assessments.
4. Understand the most prevalent errors in performance assessment.
5. Articulate the key factors that contribute to effective performance feedback.
6. Contrast consultative and expert consulting.
DOING OBJECTIVES
1. Manage employee attitudes to reduce turnover.
2. Set clear performance expectations.
3. Evaluate job performance using multiple methods and multiple sources of data.
4. Overcome common errors in observing performance.
5. Deliver effective performance feedback to a peer or employee.
6. Diagnose employee problems and manage them with performance improvement
discussions and training.
7. Make a reassignment or termination decision.
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KEY STUDENT QUESTIONS
Students will have different questions with regards to the different parts of this chapter. With
regard to the performance-management cycle, students are most often concerned with the
technical aspects of these processes – for example, which type of evaluation should be done.
Coaching and mentoring elicit an entirely different set of concerns, most of them based on
interpersonal issues – how can someone coach and still maintain good relationships within the
group, and what the difference is between coaching and mentoring. Suggested responses to all
questions are shown below.
1. What type of evaluation should be done?
The type of evaluation that should be done depends in part on the job itself. Some jobs have
very clear objective measures of results that might be important to measure (e.g., sales
process is perceived as fair to employees.
2. How can someone coach and still maintain good relationships within the group?
This is a question that lends itself to a discussion of the concepts of expert coaching vs.
consultative coaching. As presented in the text, expert coaching involves giving advice
might have on relationships within a team.
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1. Is coaching different than mentoring?
According to the authors of the text, the answer to this question is a resounding “yes.”
Coaching is about helping employees improve their day to day performance, and it is
CHAPTER OUTLINE
I. Introduction
A. Three principles about effective management
1. Management is the intervention of getting things done through others
2. Managers need their people more than those people need the manager
3. Managers get rewarded for what their employees do, not for what managers do
B. The Importance and Challenge of Performance Management
1. The challenge of being an effective coach lies in the discomfort people feel in judging
others.
2. “Common sense” often leads to dysfunctional coaching practices.
3. Myths of Effective Coaching
a. People are naturally good observers of behavior
b. Performance management is mostly common sense.
e. Performance management is HR’s responsibility
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II. Job Performance
A. Question: What do managers manage? Answer: Job performance
B. Job performance consists of two major components
1. Task performance = the core substantive or technical tasks that are essential to the job
2. Contextual performance = employee behaviors that contribute to the overall
effectiveness of the organization but are not formally required or part of the core tasks
a. Also called “Organizational Citizenship Behaviors (OCBs)”
b. Recent meta-analyses show that OCBs are strongly related to increased
individual task performance, unit or department performance, and organizational
productivity and profitability
c. Kinds of OCBs
i. Altruism = behaviors that have the effect of helping a specific other person on
v. Sportsmanship = behavior indicating an individual’s willingness to tolerate
less-than-ideal situations
III. Job Attitudes
A. Attitudes = appraisals or evaluations of people, objects, or events
B. One prevalent mistake is to assume that peoples’ attitudes and behavior are always highly
correlated
C. Withdrawal behaviors = avoiding or leaving the work situation (e.g., absence, tardy,
turnover)
1. Negative job attitudes are often associated with withdrawal behaviors
2. Positive job attitudes are associated with OCBs
D. Assessing and understanding employee attitudes and increase a manager’s success
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1. Employees may fear being forthcoming with their manager
2. Seek help from HR or consulting firm when assessing employee attitudes
IV. Job Satisfaction
A. Job satisfaction = how an individual feels about his or her job
1. Can be a global assessment of all aspects of the job
2. Can be an appraisal of specific aspects of the job (e.g., pay, coworkers, the work
itself)
B. Job satisfaction is only moderately related to job performance
1. The relationship is stronger for more complex jobs
2. Some people have argued whether high performance leads to high satisfaction (rather
than the converse), but research shows that satisfaction leads to performance
V. Organizational Commitment
A. Organizational commitment = an attitude representing the extent to which an employee
identifies with his/her organization and desires to remain a member of the organization
3. Continuance Commitment = an emotional attachment to the organization
a. People high in continuance commitment are not likely to quit but might be poor
performers
B. Research shows that employees who are more strongly committed to the organization
show lower levels of absenteeism and turnover, and sometimes higher job performance
VI. Organizational Cynicism
something
B. Organizational cynicism is not a personality trait but is shaped by context
C. Research shows that organizational cynicism is associated with:
1. Decreases in OCBs
2. Job satisfaction
3. Organizational commitment
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4. Motivation
5. Intentions to quit
6. Intent to create change
VII. Performance Management: The Day-to-Day Work of Great Managers
A. The Performance Management Cycle (PMC) = A four-step process
1. Choosing the right person for the job
2. Setting performance expectations
3. Assessing performance
4. Giving performance feedback
VIII. Setting Expectations and Evaluating Performance
A. Performance standards should never be a surprise
B. Employees should have a mutual performance contract that specifies:
1. Critical job duties
5. Developmental goals
C. Ensuring Goal Commitment
1. Make it public
2. Be supportive
3. Tie to vision/mission
7. Remove obstacles
D. Observing and Assessing Performance
1. Neither employees nor managers like performance evaluations, but evaluations are
critical for improving and sustaining employee performance
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E. Defining Performance Criteria: Behavior and Results
1. Performance evaluations must seek to capture employees’ results and the process they
used to get those results
2. To determine the objective outcomes for a job, ask the following questions:
a. If this employee performs poorly, what would suffer?
b. What will this employee’s performance make possible and for whom?
3. To identify important behaviors associated with performance, ask:
a. What are the most critical steps involved in achieving results?
b. If this employee doesn’t do the most critical steps, will he or she still be able to
succeed?
4. Results-behavior matrix (Figure 7.2) can visually classify how behavior and results
work together for a given employee
a. Most difficult employees to manager are those who are <poor results, good
F. Assessing Behavior, Not Traits
1. Great managers look at behaviors, not traits
2. Example: dependability is better characterized as arriving to work on time,
accomplishing work without frequent reminders, and meeting deadlines
G. Using Multiple Methods to Assess Behavior and Results
1. Objective assessment – based on results or impartial performance outcomes
a. Employee output that is visible and countable
b. Examples: minutes to solve a customer problem, dollar volume sold
2. Subjective assessment – involve human judgments of performance
a. Absolute subjective assessment – compares performance to a “model” described
another employee’s performance
H. Absolute Assessment Techniques
1. Graphic Rating Scale – Assesses behavior on a graduated scale (e.g. poor –
outstanding)
2. Behaviorally Anchored Rating Scale – Lists specific performance statements on a
scale from poor to outstanding, thereby giving examples of the behaviors that are
associated with each level of performance
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I. Relative Assessment Techniques
1. Ranking – Employees are listed in order of best to worst
2. Forced Distribution – Manager is required to put a certain percentage of employees
into each evaluation category
J. Using Multiple Sources of Data/People
1. Peers, subordinates, project leaders, and customers can help a manager assess
employees
2. All sources of data have limitations
3. When using multiple sources of data:
a. Observe behavior over time
b. Take notes
c. Ask for customer feedback
d. Allow for a self-evaluation
e. Monitor common errors
4. Table 7.2 – Common Error in Observing Performance and How to Avoid Them
a. Halo Effect
b. Leniency & Severity
e. Similarity or Contrast
IX. Providing Effective Feedback
A. Feedback works to influence behavioral change because:
1. It generates energy that serves to motivate the individual receiving it
2. It guides behavior in certain directions
3. It calls attention to problems that need correcting and where learning needs to occur
4. It helps to build strong interpersonal relationships
B. The Principles of Good Feedback
1. Be specific: Use direct examples of past behavior
6. Focus on the future: Correct undesirable behavior and continue desirable behavior
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7. Include information for improvement: Tell people how they can better their
performance
C. Use the following steps in delivering feedback:
3. Provide information for improvement or explore improvement with the employee
D. Managing Perceptions of Fairness in Performance Management
1. People respond favorably to fairness, but are highly sensitive to being treated in ways
they feel are unfair
2. Perceptions of fairness are based on:
a. The presence of a defined process.
i. Employees should have input into the process
ii. The process should be applied in a standard way
b. A clear and communicated rule or decision model for distributing rewards
i. Equity rule – distribute resources and rewards with respect to contributions
them the most
c. Demonstrated respect for people
i. Treat people with dignity
ii. Provide solid explanations and rationale for all performance management
decisions
X. Dealing with the Problem Employee
A. Problem employee = an employee who after repeated feedback interventions has not
improved performance
B. Three fundamental steps to improving performance: diagnose the problem, hold a
performance improvement discussion, and provide training where appropriate
C. Diagnosing the Problem
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1. Performance is a function of motivation, ability, and opportunity (where is the
problem?)
2. Managers should ask themselves what role they play in their own employee’s
performance failures
D. Holding a Performance Improvement Discussion
1. Agree on the problem
2. Mutually discuss problem solutions
3. Create an action plan
4. Provide ongoing feedback: Reinforce improvement
5. Train employees when appropriate
E. Train Employees When Appropriate
1. Training is most effective for addressing problems due to skill deficiency
F. Making a Reassignment or Termination Decision
1. If, after repeated attempts to help an employee improve, no improvement is seen, the
situation cannot continue
2. Termination is not always the answer
a. Sometimes reassignment to old positions or different posts might be ideal
3. The Termination/Reassignment Discussion
XI. Recognition and Reinforcement: Managing the Star
A. Star Performer = a person who consistently performs beyond expectations
B. A common misperception is that starts are completely self-motivated and require little
attention from managers
1. Stars want to know that their exceptional outcomes will be met with rewards and
recognition
2. Potential issues with stars
a. Stars may possess an overdeveloped sense of entitlement
b. Star performance may be a function of external rewards and not intrinsic
motivation
opportunities for stars to grow and develop
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C. Understanding Star Performers
1. Learning orientation – Stars seek environments where they can learn and develop
their skills
2. Selective hiring – Stars want their managers to hire the best people to share the
workload
3. Reward and recognition – Stars want to work in environments that reward individual
performance and recognize their efforts
4. Challenging job assignments – Stars want to increase their performance and expertise
D. Engaging the Star Performer
1. Star performers want challenging work assignments that include:
a. Unfamiliar, new, or broader tasks
b. An opportunity to create change in the organization
c. A high level of responsibility
d. Non-authority relationships
e. Obstacles
XII. Coaching for Employee Growth
A. Goal is helping people build capacity to develop and solve their own problems more
effectively
B. Expert coach = Dispenses advice, instructs, prescribes
1. Use when:
a. Problem and solution are simple and clear
b. There are “right” answers
c. The employee is a novice and needs a lot of structure
C. Consultative coach = Helps employees explore alternatives and challenges their thinking
1. Use when:
a. The problem and solution are ambiguous
b. The problem continues to reappear; past attempts to solve the problem have
failed
c. There is relatively less urgency