Bauer, Human Resource Management
SAGE Publishing, 2020
Lecture Notes
Chapter 9: Performance Management
Learning Objectives
9.2. Compare the design features of different types of appraisals with respect to their benefits
and downsides.
9.3. Identify best practices for making performance reviews fair and unbiased.
Chapter Summary
This chapter aims to describe the ways organizations measure, compare, and give feedback on
performance levels of different employees. The chapter begins with an overview defining performance
management and delves into an examination of performance appraisals. Then, design features of
Annotated Chapter Outline
I. What is Performance Management? when successful, performance management systems
help with employee engagement, retention, and the achievement of organizational
objectives
i. Performance management: process of measuring, communicating, and
managing employee performance in the workplace so that performance is
aligned with organizational strategy
ii. Performance appraisal: process of measuring employees’ performance using
predetermined criteria and sharing this information with employees
Bauer, Human Resource Management
SAGE Publishing, 2020
ii. Development and problem solving
iii. Decision making
iv. Data analytics
a. Importance of high-quality data
C. Challenges of Conducting Fair and Objective Performance Appraisals
i. Performance appraisals as a measurement tool
a. Efforts to make performance appraisals more accurate and objective
D. Characteristics of Effective Performance Appraisal Systems
i. Strategic Alignment
ii. Perceived Fairness
a. Performance appraisal due process
a. Adequate notice: the idea that employees should be evaluated
using criteria and standards that were clearly communicated to
iii. Accuracy
a. Challenging due the difficulty of measuring it
iv. Practicality
II. Design Features of Performance Management Systems: Performance management system
design is a responsibility usually spearheaded by HR departments.
A. Determining the Purposes and Desired Outcomes of Performance Appraisals
i. Developmental purposes: providing employees periodical, formal feedback on
their performances
Bauer, Human Resource Management
SAGE Publishing, 2020
B. Defining Performance
i. Three different approaches to measurement of performance
a. Specific dimensions should come from a strong job analysis and the
resulting job description
d. Behavioral appraisals: assess the frequency with which employees
demonstrate specific behaviors at work
a. Useful for feedback purposes
b. May not be possible to create a list of behaviors that capture
high performance in all jobs
f. Goal setting
a. Management by objectives (MBO): management strategy
where organizational goals are translated into department
goals, which are then converted into individual-level goals to
ensure that individual and company goals and objectives are
employees, reduced motivation to learn new things
C. Choosing the Rating Method
i. Absolute ratings: involve a comparison of the employee’s performance to
predetermined criteria while treating each performance score within a work
group as independent
Bauer, Human Resource Management
SAGE Publishing, 2020
ii. Relative rankings: involve comparison of each employee’s performance to that of
coworkers
a. Straight rankings: involve having the rater rank order all employees
from best to worst
d. Limitations
1) Inconsistent with norms of cooperation
iii. Qualitative Assessment
a. Describes the areas of strengths and limitations for feedback purposes,
without assigning a numerical rating to each employee
b. Critical incident method: Managers identify examples of exceptionally
D. Choosing the Source of Performance Information
i. 360-degree feedback: presents employees with feedback from different
stakeholders
ii. Managers
a. Often the most knowledgeable source and in position to collect more
information
iii. Coworkers
iv. Direct reports
a. Importance of anonymity
v. Customers
Bauer, Human Resource Management
SAGE Publishing, 2020
E. Choosing the Ratee
i. Limitations of focusing on individual performance
ii. Team appraisals: goals and performance metrics at the team level
a. Important metric for banks
F. Deciding How Closely to Link Performance Ratings to Compensation
i. Established effects of pay for performance
III. Conducting Fair Performance Reviews: examining errors that can affect the rating process
A. Factors Leading to Rating Errors
i. Leniency: tendency of a rater to rate most employees highly
ii. Severity: tendency to rate most employees closer to the lower end of the scale
iii. Central tendency: tendency to rate most employees closer to the lower end of
the scale
a. Consists of behaviors individuals demonstrate to portray a specific
image
a. Supervisor-focused tactics are particularly effective in positively
influencing performance ratings.
viii. Personal characteristics of raters and ratees
IV. Improving the Effectiveness of Performance Management: outlines the variety of ways for
improvement
A. Training Managers and Employees
Bauer, Human Resource Management
SAGE Publishing, 2020
true score and why raters should rate in a particular way to standardize the
rating process
B. Increasing Rater Accountability
i. Lack of research support for increased accuracy of measurement
ii. Three primary means to increase rater accountability
a. Managers’ effectiveness as a performance dimension
C. Having Raters Keep Records of Employee Performance
i. Diary keeping: keeping records of employee performance
D. Auditing the System
i. Periodic audits are a best practice
ii. May reveal
V. Teaching Managers How to Be Good Coaches and Build Trust: having managers be good
coaches and have a trusting relationship with employees is important for performance
review
A. Developing a Feedback Culture
i. Feedback culture: where employees and managers feel comfortable giving and
receiving feedback
B. Establishing Performance Improvement Plans (PIP)