Chapter 10 – Managing Employees’ Performance
Chapter Ten: Managing Employees’ Performance
Welcome to your guide to teaching Chapter Ten, Managing Employees’
Performance!
This guide will provide you with a chapter summary, learning objectives, lecture
outlines, solutions to in-chapter case questions and end of chapter discussion questions
and possible responses.
Chapter Ten Roadmap
We hope you find each chapter of your Instructor Manual practical and useful, but also,
exciting! You can adapt the chapter text, the PowerPoints, and the video to work in an online
class environment, a guided independent study environment, or a face to face or on-ground
environment.
When presenting Chapter Ten, have the students first read the chapter and encourage
them to absorb the “big picture” of Managing Employees Performance.
Use the PowerPoint for Chapter Ten to frame your lecture.
Have students read and discuss the Cases and their respective Questions.
Have students validate their knowledge of the chapter by working through the
Discussion Questions at the end of the Chapter.
Lastly, have students review, journal, or discuss the Key Vocabulary Terms at the end of
the chapter.
ROADMAP: THE LECTURE
MANAGING EMPLOYEES’ PERFORMANCE
Chapter Summary
This chapter examines a variety of approaches to performance management. It begins by
describing the activities involved in managing performance and then discusses the purpose of
carrying out this process. Next, the chapter identifies specific approaches to performance
management, including the strengths and weaknesses of each approach. It also looks at
various sources of performance information. The next section of the chapter explores the kinds
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whole or part.
Chapter 10 – Managing Employees’ Performance
of errors that commonly occur during the assessment of performance as well as ways to reduce
those errors. Then, the chapter describes ways of giving performance feedback effectively and
intervening when performance must improve. Finally, it summarizes legal and ethical issues
affecting performance management.
Learning Objectives
After studying this chapter, the student should be able to:
1. Identify the activities involved in performance management.
2. Discuss the purposes of performance management systems.
3. Define five criteria for measuring the effectiveness of a performance management system.
4. Compare the major methods for measuring performance.
5. Describe major sources of performance information in terms of their advantages and
disadvantages.
6. Define types of rating errors and explain how to minimize them.
7. Explain how to provide performance feedback effectively.
8. Summarize ways to produce improvement in unsatisfactory performance.
9. Discuss legal and ethical issues that effect performance management.
I. Introduction
The opening vignette highlights how Microsoft used to rate their employees on a scale of 1 to 5;
1 being the highest. If rated high, employees would get a large bonus. HR also established a
curve in which managers needed to place their employees to better match the pay of the local
labor market. Managers were also expected to have a few employees at the top and a few at
the bottom of the curve. After some research, the human resource department found that these
systems cause the employees to be in competition with each other rather than thinking of their
co-workers as teammates. So Microsoft changed it practices and now rates employees on
accomplishments, use of coworker’s input, and contributions to coworker’s success. Managers
are required to give feedback more than at the annual review time. Microsoft made the changes
as an important step in creating the best possible environment for their world class talent.
Discussion Question and Suggested Response.
What is better about the new way of performance management at Microsoft compared to
the old way?
Answers will vary. Students should focus on how the old was too competitive and
encouraged individualism instead of team work. It also used some forced ranking which
meant that everyone wasn’t necessarily rated accordingly. The new system allowed for
more feedback which should result in stronger performance and more teamwork as part
of the ranking is based on helping co-workers succeed.
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
Chapter 10 – Managing Employees’ Performance
1. Performance management is the process through which managers ensure that
employees’ activities and outputs contribute to the organization’s goals.
2. The process of performance management requires knowing what activities and outputs
are desired, observing whether they occur, and providing feedback to help employees
meet expectations.
3. In the course of providing feedback, managers and employees may identify performance
problems and establish ways to resolve those problems.
II. The Process of Performance Management
1. Although many employees dread the annual “performance appraisal” meeting at which a
boss picks apart the employee’s behaviors from the past year, performance management
can potentially deliver many benefits.
2. Effective performance management can tell top performers that they are valued,
encourage communication between managers and their employees, establish consistent
standards for evaluating employees, and help the organization identify its strongest and
weakest employees.
3. Figure 10.1, Steps of the Performance Management Process, identifies the stages of
the performance management process. These include:
a. Identify what the company is trying to accomplish.
b. Develop employee goals and actions to achieve these outcomes.
c. Provide training, necessary resources and tools, and ongoing feedback.
d. Evaluate performance.
e. Identify what the employee can do to capitalize on performance strengths and
address weaknesses.
f. Provide consequences for achieving or failing to achieve performance outcomes.
III. Purposes of Performance Management
1. Organizations establish performance management systems to meet three broad
purposes. These purposes include:
a. Strategic purposes – helps the organization achieve its business objectives
b. Administrative purposes – the ways in which the organization uses the system to
provide information for day-to-day decisions about salary, benefits, and recognition
programs
c. Developmental purposes – serves as a basis for developing employees’ knowledge
and skills
2. Effective performance feedback make employees aware of their strengths and
weaknesses and of the areas in which they can improve.
IV. Criteria for Effective Performance Management
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Chapter 10 – Managing Employees’ Performance
1. For performance management to achieve its goals, its methods for measuring
performance must be good enough. There are several ways to measure the
performance of an employee. Selecting these measures is a critical part of planning a
performance management system.
2.. A performance management system should aim at achieving employee behavior and
attitudes that support the organization’s strategy, goals, and culture.
3. In the case of performance appraisal, validity refers to whether the appraisal measures all
the relevant aspects of performance and omits irrelevant aspects of performance.
4. Figure 10.2, Contamination and Deficiency of a Job Performance Measure, shows two
sets of information that can be found in a job performance appraisal. Contamination refers
to information that is gathered but irrelevant. Deficiency refers to information that is not
gathered but is relevant.
5. With regards to a performance measure, reliability describes the consistency of the results
that the performance measure will deliver. Interrater reliability is consistency of results
when more than one person measures performance. Test-retest reliability refers to
consistency of results over time.
6. Whether or not a measure is valid and reliable, it must meet the practical standard of
being acceptable to the people who use it.
7. A performance measure should specifically tell employees what is expected of them
and how they can meet those expectations.
V. Methods for Measuring Performance
1. Organizations have developed a wide variety of methods for measuring performance.
2. Table 10.1 compares these methods in terms of criteria for effective performance
management.
Best Practices
A Goal-Oriented System of Performance Management
Medtronic, a large medical device company, had a performance management system that worked
administratively but did not help motivate employees or help with their development. Caroline
Stockdale, Chief Talent Officer, implemented a new program called “performance acceleration”
which had managers meet with employees four times a year to talk about goals and what
employees should start doing, stop doing, and continue doing. They still did an annual review to fill
administrative requirements. The results of the new program helped employees to achieve more
goals and receive feedback on a more regular basis.
Discussion Questions with Possible Responses
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Chapter 10 – Managing Employees’ Performance
1. Evaluate how well Medtronic’s performance acceleration system, as it is described here,
meets the standards for validity and reliability.
The new system is more reliable because conversations happen over a 12 week period
instead of 12 month period. There is more consistency in observing and giving feedback
and less chance for performance appraisal errors. It is also more valid since the goals are
specific and the manager and employee both understand the goals and then the
performance feedback is on the measurement of the goals.
2. How does it rate in terms of being acceptable and delivery specific feedback?
The employees and managers now see the system as being an effective tool for
continuous improvement. Feedback on a more regular basis helps employees to
continue and to start doing something that will better help achieve the goals.
A. Making Comparisons
1. The performance appraisal method may require the rater to compare one individual’s
performance with that of others. The usual techniques for making comparisons are:
simple ranking, forced distribution, and paired comparison.
2. Simple ranking requires managers to rank employees in their group from the highest
performer to the poorest performer. Alternation ranking is a variation of this approach.
With alternation ranking, the manager works from a list of employees. The major
downside to ranking involves validity. Ranking also raises questions about fairness.
3. Another way to compare employees’ performance is with the forced-distribution
method. This type of performance measurement assigns a certain percentage of
employees to each category in a set of categories. A forced-distribution approach
works best if the members of a group really do vary in terms of their performance. It
overcomes the temptation to rate everyone high in order to avoid conflict.
4. Another variation on rankings is the paired comparison method. This approach
involves comparing each employee with each other employee to establish rankings.
This method is time consuming especially if there are several employees. For
instance, for a group of 15, the manager must make 105 comparisons.
5. Ranking employees offers some benefits such as: (1) counteracts the tendency to
avoid controversy by rating everyone favorably or near the center of the scale, (2) can
erase the tendency of evaluating too strictly or too leniently from performance scores,
and (3) some ranking systems are easy to use.
6. Drawbacks of ranking systems include: (1) often are not linked to organizational
goals, and (2) a simple ranking system leaves the basis for the ranking open to
interpretation.
B. Rating Individuals
1. Performance can look at each employee’s performance relative to a uniform set of
standards.
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Chapter 10 – Managing Employees’ Performance
3. The measurement may evaluate employees in terms of attributes – characteristics
believed desirable- or the measurements might identify whether employees have
behaved in desirable ways. For both approaches, the performance management system
must identify the desired attributes or behaviors, then provide a form on which the
manager can rate the employee in terms of those attributes or behaviors. Typically, the
form includes a rating scale.
Did You Know
Popular Performance Measures
In a survey done by Business & Legal Resources, most companies measure the quality of work
on performance appraisal. Slightly more than half the respondents said they measure goal
achievement and less than half said they measure individuals’ attributes.
Discussion Question with Possible Answer
Of the five measurements shown, which would you describe at attributes, and which would you
describe as traits? Why?
Answers will vary.
C.Rating Attributes: The most widely used method for rating attributes is the graphic
rating scale. This method lists traits and provides a rating scale for each trait. Figure
10.3, Example of a Graphic Rating Scale, shows an example of a graphic rating scale
that uses a set of ratings from 1 to 5.
1. A drawback to the graphic rating scale approach is that it leaves to the manager the
decisions about what is “excellent knowledge” or “commendable judgment” or “poor
interpersonal skills.” The result is low reliability because one manager is likely to
arrive at different judgments than another manager.
2. To get around such problems, some organizations use mixed-standard scales,
which use several statements describing each trait to produce a final score for that
trait. Figure 10.4, Example of a Mixed-Standard Scale, provides an example of this
type of instrument.
3. Rating attributes is the most popular way to measure performance in organizations.
In general, attribute-based performance methods are easy to develop and can be
applied to a wide variety of jobs and organizations. If the organization is careful to
identify which attributes are associated with high performance and to define them
carefully on the appraisal form, these methods can be reliable and valid. However,
appraisal forms often fail to meet this standard.
D. Rating Behaviors: One way to overcome the drawbacks of rating attributes is to
measure employees’ behavior. To rate behaviors, the organization begins by defining
what behaviors are associated with success on the job.
1. One way to rate behaviors is with the critical-incident method. This approach
requires managers to keep a record of specific examples of the employee acting in
ways that are either effective or ineffective.
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Chapter 10 – Managing Employees’ Performance
stitute for careful management.
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.