Industrial and Organizational Psychology

1
Performance Management

Performance Management

Industrial Psychology was borne out of try to understand the relationship of

man and his workplace. At the end of this chapter, you will be able to:
1. Illustrate what is performance management
2. Construct a model of the cycle of performance management
3. Deconstruct performance Issues
4. Outline the different methods of assessing performance
5. Detect and judge the different problems and pitfalls of performance
appraisals

Performance Management Overview

Performance management is about ensuring employee productivity and
effectivity in achieving set goals and targets. It is a cycle of planning,
monitoring, reviewing and evaluating outcomes based on set targets.
Performance management is not solely focused on the employee performing.
Recently, organizations have widened the aspect to involve organizational,
departmental, program, project performance. Each aspect of the organization
is now subject to performance reviews and issues to ensure that the goals of
the organization are met.
Performance is defined as the ability to produce outputs or results. Typically,
performance is measured in three levels: the organization, the employee and
the process.
Organizations base their performance goals and objectives on its vision,
mission and operating strategies. These are normally driven by the
company’s top management and executed by their teams.
Employees base their performance from their team objectives and have their
own set of goals and objectives within the bounds of their duties and
responsibilities. These should fall into achieving the bigger team goals and
objectives.
The process level would concern all systems supporting the achievement of
the goals of the organization and individual. One would look at the workflow,
resources, necessary inputs and outputs to complete job assignments.
When all of these three are present, there is ease in achieving performance
objectives. When there is something lacking in the performance, it is good to
review any of these levels to see where the gaps are.

I/O Psychology
Cycle of Performance Management
Performance management is a practice in organizations that is consistently
done year in and year out. It requires management and employees to always
be in touch to ensure that performance is objectively measured and that
goals are reached. The cycle for performance management involves four (4)
simple steps.
Planning
In the planning stage, both managers and employees take an active part in
setting goals, objectives and measures. Normally, both parties would look at
organizational and departmental objectives to find out what employee
contribution is needed to help in achieving the bigger goals. A work plan is
devised that usually follows the SMART way – Specific, Measurable,
Attainable, Realistic and Time bound. It is recommended to identify only 3-5
objectives for the employee to keep work manageable. Once objectives are
set, both parties may determine specific measures for each to ensure
objectivity come evaluation time. Being able to identify what merits an
average, above average and poor rating would also allow the employee to
keep track of his progress and own his performance.
Monitoring
In the monitoring stage, managers track performance of employees from
time to time. This may include coaching sessions to find out where an
employee is in a project and if there are any obstacles that the manager can
help clear for the project to proceed. It also involves giving feedback on
performance or work ethic to allow continuous development for the
employee. This allows the employee to improve on oneself before the
appraisal period is over versus getting a low rating at the end of the appraisal
period. Managers may opt to change work plans depending on organizational
needs and employee capability.
Coaching is an important part of monitoring in such a way that constructive
problem solving is applied. By means of coaching, the manager is able to give
guidance and direct employees to the right path. It is important that when
managers coach that they listen more and draw out the answers from the
employees instead of spoon-feeding them the answers. This allows for
independence and critical thinking.
Giving feedback and having difficult conversations is an area of monitoring
that most people tend to avoid due to its sensitivity. Employees however
need to hear feedback on their performance and work ethic to allow growth
and improvement. Managers need to ensure the privacy and objectivity in
giving feedback to avoid defensive answers from employees. Selecting the
time and place is key to ensure that the employee is safe and relaxed. It is
important to note that when giving feedback, only involved people should be
present and that conversation should be kept confidentially. It is also
encouraged that managers give feedback objectively by properly stating
facts. Managers may do this by being specific in their feedback as opposed to
making generalizations. A good feedback statement would be “I noticed in
your timelines that you have gone beyond your deadlines for 5 projects last
month. When you miss those deadlines, the department is not able to release
 Industrial and Organizational Psychology
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Performance Management

reports on time that is needed for operations.” Once this is opened up, be
prepared to listen actively and find out together how this situation can be
avoided moving forward. You may agree on what actions to take and how
often performance is checked for alignment and accountability.
Developing
It is important in every performance period to include developmental plans
for employees. Identifying developmental areas based on performance gaps
allows the employee to improve and contribute more to the organization. A
manager may also proactively ask the employee what areas he is interested
to develop to encourage ownership. Having a developmental plan in
performance appraisals allow companies to retain talents as they both
proactively work on growth.
An employee who has a defined developmental plan may go through formal
and informal learning programs that may include training, coaching sessions
and the like. An employee may also be assigned to a different job or function
for hands-on learning.
Evaluating
Evaluation or assessment of one’s performance aims to summarize the
employee’s performance in a given period. Different organizations may have
their own way of assessing their people and may often include rating scales
and narrative summaries of an employee’s overall performance. It is
important to note that objectivity is maintained and evaluations must be
based on actual performance results.
A self-assessment is a part of performance appraisal where the employee will
look at his own performance and assess himself based on the set objectives.
Managers should review performance appraisals and also evaluate the
employee based on the accomplished work submitted to him. It is important
to write down challenges, unforeseen work barriers that may have come up
to be fair in the assessment. Being specific in setting the objectives and
measures will help in keeping the appraisal objective. Managers and
employees alike may also include unforeseen projects that the employee took
on as additional work.
More often than not, people have the tendency to equate evaluations to
rewards or merit increases at the end of the appraisal period. Though most
companies may base their rewards on performance, the performance
management system should not be taken as a be-all, end-all tool in
determining rewards.

Performance Issues
There are several reasons why an employee may not be able to perform his
work well. Employees who experience work challenges should be coached to
help improve performance. In some cases where performance issues are
I/O Psychology
 serious and detrimental to the organization, the employment contract may
be terminated for justified causes.
1. Absenteeism and Tardiness – Workers should be briefed on company
expectations with regard to attendance. Some organizations have
implemented flexible schedules or shuttles to help employees in
managing their attendance.
2. Personal Work During Office Hours – Most companies implement a policy
on what is acceptable work during office hours. Personal errands and
transactions during office hours should be avoided as part of work ethic
and etiquette.
3. Confidentiality – In some companies, it is inevitable that some employees
will be exposed to confidential data and information regarding projects
handled. It is of utmost importance that employees maintain the privacy
of data and information at all times. Companies may opt to have
employees sign a non-disclosure agreement preventing leakage of
information and data.
4. Personal Problems – Family issues such as separations, illness, childcare
are one of the top reasons why an employee may not be able to function
well at work.
5. Conflict – Employees may from time to time come in conflict with a
colleague or a boss that may hinder them from doing their work well.
Office politics should be put aside and focus must be maintained on the
work at hand and not on personalities.

Methods of Assessing Performance

There are several ways by which an employee can be evaluated.
Traditionally, performance appraisals have focused on the manager and
employee where rating scales as well as narratives have been the basis of
performance. As years went by, performance management methods have
evolved to consider more holistic and comprehensive approaches to
conducting performance management.
Traditional
A well-known way of appraising an employee is by making use of narratives
where the manager writes an essay of accomplishments and challenges. This
may be based on behavior or targets. A narrative appraisal may include
strengths and developmental areas as seen by the manager. This is highly
dependent on the manager’s ability to articulate well his evaluation. Due to
its length, managers may tend to not capture the breadth of an employee’s
performance.
Another method of appraising employees is by use of checklist appraisals
that would require ticking of boxes. This type of appraisal will only record
yes or no answers and does not provide opportunities to explain
performance.
Rating employees is the most common way of evaluation. An employee is
rated based on a scale. At times, employees are ranked and forcefully
distributed based on a bell curve. This would pre-suppose that majority of
employees fall in the average category while poor and above average
performers are only a select number of people. This tends to compare
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Performance Management

employees against each other and would depend on who is ranked the
highest or lowest.
Critical incidents has also served as a method of appraising employees where
the manager will cite specific instances an employee displayed a certain
behavior or how one was able to accomplish a target. This would require the
manager to be mindful of jotting down specific situations that one would
want to reflect in the performance appraisal.
Modern
A new approach to appraising employees would be obtaining data 3600.
Feedback is taken from the superior, employee, his peers and customers to
have a holistic view of the employee’s performance. This would enable
managers to marry all information and come up with an informed rating.
Other times, practitioners may see conflicting data depending on the
employee’s relationship with his stakeholders.
Management by objectives (MBO) allows employees to set specific goals and
managers checking on the accomplishment of these from time to time. This
greatly involves the employee in setting objectives and encourages
ownership.
Behaviorally Anchored Rating Scale (BARS) makes use of a five to nine point
scale where it integrates the narrative, critical incidents and quantified
ratings in the scale. Each point in the scale corresponds to a certain rating
with a narrative of performance with what may be seen as critical incidents
for that rating.

Problems and Pitfalls of Performance Management

Performance management is often riddled with pitfalls that go into
assessment. Awareness of these pitfalls lessen the occurrence and
mindfulness of what can be done to prevent it should help practitioners to
design better appraisal systems.
1. Bias – preconceived notions whether positive or negative against an
employee may sometimes influence their performance rating.
2. Halo effect – generalizations whether positive or negative affecting
several performance categories thereby affecting the overall performance
rating
3. Recency Effect – tendency for the rater to remember that most recent
event/situation when doing the appraisal evaluation
4. Unequal Rating measures – one manager may rate his staff too leniently
or too strictly as compared to another manager or rate one staff too
leniently or too strictly as compared to another staff

I/O Psychology
Glossary
Performance management - ensuring employee productivity and effectivity
in achieving set goals and targets
Performance - the ability to produce outputs or results
Planning – a stage in performance management that sets objectives
Monitoring - a stage in performance management that constantly checks in
the progress of the employee in achieving his objectives
Developing - a stage in performance management that identifies the
performance gaps and learning solutions to address these
Evaluating – a stage in performance management that assess the
performance of the employee

References
Books
Riggio, R. E. (2013). Introduction to industrial and organizational psychology
(6th ed.). London: Routledge.
Weiner, I. B.; Highhouse, S.; Schmitt, N. (2013). Series: handbook of psychology
(2nd ed.). Chichester : Wiley.
University of Minnesota Library Website. Human resource management.
Retrieved from:
http://open.lib.umn.edu/humanresourcemanagement/chapter/10-1-
handling-performance-2/; May 4, 2017
Online References
HR Council Website. Retrieved from: http://hrcouncil.ca/hr-toolkit/keeping-
people-performance-management.cfm; May 4, 2017
United States Office of Personnel Management Website. Retrieved from:
https://www.opm.gov/policy-data-oversight/performance-
management/overview-history/; May 4, 2017
Performance Magazine Website. Retrieved from:
http://www.performancemagazine.org/pitfalls-in-performance-appraisals/;
May 4, 2017
Online Video
Performance Management; https://cosmolearning.org/video-
lectures/performance-management-10306/; May 4, 2017