Chapter 2 Performance Management Process In theory, the Performance Review process can be thought of as a positive interaction between a “coach” and an employee, working together to achieve maximum performance. In reality, it’s more like finding a dead squirrel in your backyard and realizing the best solution is to fling it onto your neighbor’s roof. —Scott Adams (The Dilbert Principle) Learning Objectives By the end of this chapter, you will be able to do the following: • Understand that performance management is an ongoing process that includes the interrelated components of prerequisites, performance planning, performance execution, performance assessment, performance review, and performance renewal and recontracting. • Conduct a job analysis to determine the job duties, knowledge, skills, and abilities (KSAs), and working conditions of a particular job. • Write a job description that incorporates the KSAs of the job and information on the organization and unit mission and strategic goals. • Understand that the poor implementation of any of the performance management process components has a negative impact on the system as a whole. • Understand that a dysfunctional or disrupted link between any two of the performance management process components has a negative impact on the system as a whole. • Understand important prerequisites needed before a performance management system is implemented, including knowledge of the organization’s mission and strategic goals and knowledge of the job in question. • Distinguish results from behaviors, and understand the need to consider both in performance management systems. • Describe the employee’s role in performance execution, and distinguish areas over which the employee has primary responsibility from areas over which the manager has primary responsibility. • Understand the employee’s and the manager’s responsibility in the performance assessment phase. • Understand that the appraisal meeting involves the past, the present, and the future. • Understand the similarities between performance planning and performance renewal and recontracting. • Create results- and behavior-oriented performance standards. As described in Chapter 1, performance management is an ongoing process. Performance management does not take place just once a year. Performance management is a continuous process including several components.1 These components are closely related to each other, and the poor implementation of any of them has a negative impact on the performance management system as a whole. The components in the performance management process are shown in Figure 2.1. This chapter provides a brief description of each of these components. Subsequent chapters address each of the components in greater detail. Let’s start with the prerequisites. 2.1 Prerequisites There are two important prerequisites that are required before a performance management system is implemented: (1) knowledge of the organization’s mission and strategic goals and (2) knowledge of the job in question.2 As described in detail in Chapter 3, knowledge of the organization’s mission and strategic goals is a result of strategic planning (as also discussed in detail in Chapter 3, the strategic planning process may take place after the mission and vision statements are created; thus, there is a constant interplay between mission and vision and strategic planning). Strategic planning allows an organization to clearly define its purpose or reason for existing, where it wants to be in the future, the goals it wants to achieve, and the strategies it will use to attain these goals. Once the goals for the entire organization have been established, similar goals cascade downward, with departments setting objectives to support the organization’s overall mission and objectives. The cascading continues downward until each employee has a set of goals compatible with those of the organization. Unfortunately, it is often the case that many organizational units are not in tune with the organization’s strategic direction. However, there seems to be a trend in the positive direction. For example, a study including public sector organizations in Queensland, Australia, showed a fairly high level of strategic integration of the human resources (HR) function. Specifically, approximately 80% of the organizations that participated in the study were categorized as having achieved the highest level of strategic integration. This level is characterized by a dynamic and multifaceted linkage based on an “integrative relationship between people management and strategic management process.”3 Recall that an important objective of any performance management system is to enhance each employee’s contribution to the goals of the organization. If there is a lack Figure 2.1 Performance Management Process of clarity regarding where the organization wants to go, or if the relationship between the organization’s mission and strategies and the unit’s mission and strategies is not clear, there will be a lack of clarity regarding what each employee needs to do and achieve to help the organization get there. The second important prerequisite before a performance management system is implemented is to understand the job in question. This is done through job analysis. Job analysis is a process of determining the key components of a particular job, including activities, tasks, products, services, and processes. A job analysis is a fundamental prerequisite of any performance management system. Without a job analysis, it is difficult to understand what constitutes the required duties for a particular job. If we don’t know what an employee is supposed to do on the job, we won’t know what needs to be evaluated and how to do so. As a result of a job analysis, we obtain information regarding the tasks carried out and the knowledge, skills, and abilities (KSAs) required of a particular job. Knowledge includes having the information needed to perform the work, but not necessarily having done it. Skills refer to required attributes that are usually acquired by having done the work in the past. Ability refers to having the physical, emotional, intellectual, and psychological aptitude to perform the work, but neither having done the job nor having been trained to do the work is required.4 The tasks and KSAs needed for the various jobs are typically presented in the form of a job description, which summarizes the job duties, needed KSAs, and working conditions for a particular job. As an illustration, see the box “Job Description for Trailer Truck Driver.” This job description includes information about what tasks are performed (e.g., operation of a specific type of truck). It also includes information about the needed knowledge (e.g., manifests, bills of lading), skills (e.g., keeping the truck and trailer under control, particularly in difficult weather conditions), and abilities (e.g., physical and spatial abilities needed to turn narrow corners). Job analysis can be conducted using observation, off-the-shelf questionnaires, or interviews. Data are collected from job incumbents (i.e., those doing the job at present) and their supervisors. Alternatively, if the job is yet to be created, data can be gathered from the individual(s) responsible for creating the new position and those who will supervise individuals in the new position. Observation methods include job analysts watching incumbents do the job, or even trying to do the work themselves, and then producing a description of what they have observed. This method can be subject to biases because job analysts may not be able to distinguish important from unimportant tasks. Such analysis may not be suitable for many jobs. For example, a job analyst could not do the work of a police officer for safety reasons or the work of a software programmer for the lack of knowledge and skills to do the work. Off-the-shelf methods involve distributing questionnaires, including a common list of tasks or KSAs, and asking individuals to fill them out, indicating the extent to which each task or KSA is required for a particular job in question. These generic off-the-shelf tools can be practical, but they might not capture the nuances and idiosyncrasies of jobs out of the mainstream. Interviews are a very popular job analysis method. During a job analysis interview, the job analyst asks the interviewee to describe what he or she does (or what individuals in the position do) during a typical day at the job from start to finish (i.e., in chronological order). Alternatively, the job analyst can ask the interviewee to describe the major duties involved in the job and then ask him or her to break down these duties into specific tasks. Once a list of tasks has been compiled, all incumbents should have Box 2.1 Job Description for Trailer Truck Driver: Civilian Personnel Management Service, U.S. Department of Defense Operates gasoline- or diesel-powered truck or truck tractor equipped with two or more driving wheels and with four or more forward speed transmissions, which may include two or more gear ranges. These vehicles are coupled to a trailer or semitrailer by use of a turntable (fifth wheel) or pintle (pivot) hook. Drives over public roads to transport materials, merchandise, or equipment. Performs difficult driving tasks such as backing truck to loading platform, turning narrow corners, negotiating narrow passageways, and keeping truck and trailer under control, particularly on wet or icy highways. May assist in loading and unloading truck. May also handle manifest, bills of lading, expense accounts, and other papers pertinent to the shipment. an opportunity to review the information and rate each task in terms of frequency and criticality. The frequency and criticality scales may be the following:5 Frequency Criticality 0: not performed 0: not critical 1: every few months to yearly 1: low level of criticality 2: every few weeks to monthly 2: below average level of criticality 3: every few days to weekly 3: average level of criticality 4: every few hours to daily 4: above average level of criticality 5: hourly to many times each hour 5: extremely critical Rating both frequency and criticality is necessary because some tasks may be performed regularly (e.g., making coffee several times a day) but may not be very critical. The job analyst can then multiply the frequency scores by the criticality scores to obtain an overall score for each task. So, if making coffee receives a frequency score of 4 (i.e., “every few hours to daily”) and a criticality score of 0 (i.e., “not critical”), the overall score would be 4 × 0 = 0. Considering frequency scores alone would have given us the wrong impression that making coffee is a task that deserved a prominent role in the job description. Overall scores for all tasks can be ranked from highest to lowest to obtain a final list of tasks. Numerous job analysis questionnaires are available on the Internet. These questionnaires, which can be administered online, with a paper survey or in interview format, can be used for a variety of positions. For example, the state of Delaware uses a job analysis questionnaire available at http://www.delawarepersonnel.com/class/forms/jaq/jaq.shtml or http://www.delawarepersonnel.com/class/forms/jaq/jaq .htm. This questionnaire includes 18 multiple-choice job content questions. Job content information is assessed through three factors: (1) knowledge and skills, (2) problem solving, and (3) accountability and end results. As a second example, the city of Alexandria, Virginia, uses a job analysis questionnaire available at http://alexandriava .gov/class_comp/job_analysis.html. This instrument does not include multiple-choice questions. Instead, employees answer more general questions about their jobs together with the allocation of the percentage of time employees spend performing each duty. In addition, respondents are encouraged to attach forms, work schedules, reports, memoranda, and other materials that may help explain the responses provided. Conducting a Google search for the phrase “job analysis questionnaire” leads to several other instruments. Be aware that some of these instruments may have been created for specific types of jobs and industries (e.g., service jobs, nonsupervisory jobs). Make sure you check the suitability of the instrument before using it in a different organizational context. Combining items and formats from various instruments already available may be the most effective way to proceed. An important component of a good job analysis is rater training. In other words, there are several biases that can affect the accuracy of the information provided by individuals regarding KSAs needed for a job.6 Consider the following biasing factors: 1. Self-serving bias: This bias leads people to report that their own behaviors and personality traits are more needed for successful job performance compared to behaviors and personality traits of others. This is because people tend to attribute success to themselves and failure to external causes (i.e., factors outside of their control). 2. Social projection and false consensus bias: Social projection bias leads people to believe that others behave similarly to themselves and, hence, lead people to think about themselves when reporting KSAs for their job instead of people in general. False consensus bias is similar in that it leads people to believe that others share the same beliefs and attitudes as themselves. Taken together, self-serving, social projection, and false consensus biases affect job analysis ratings because they lead people to believe that their own KSAs are those driving success on their jobs. So, these lead to an exaggerated view regarding the KSAs needed—and this exaggeration is based on precisely the KSAs that job incumbents have. How do we address these biases? A recent experimental study involving two independent samples of 96 administrative support assistants and 95 supervisors working for a large city government implemented a successful Web-based training program that succeeded in mitigating these biases.7 Specifically, across the five job characteristics rated in that study, individuals who did not participate in the Web-based training program were 62% (administrative support assistants) and 68% (supervisors) more likely to provide a higher rating than if the same individual provided the job analysis ratings after participating in the training program. The Web-based training program, which takes about 15 minutes to administer, provides a common frame of reference for all raters and includes the following five steps: 1. provide raters with a definition of each rating dimension 2. define the scale anchors 3. describe what behaviors were indicative of each dimension 4. allow raters to practice their rating skills, and 5. provide feedback on the practice The information obtained from a job analysis is used for writing a job description. Writing a job description may seem like a daunting task; however, it does not have to be difficult. Generic job descriptions can be obtained from the Occupational Informational Network (O*NET) (http://online.onetcenter.org/find/). O*NET is a comprehensive database of worker attributes and job characteristics that provides a common language for defining and describing occupations. The descriptions available via O*NET can serve as a foundation for a job description. O*NET descriptions can be easily adapted and changed to accommodate specific local characteristics. For example, see O*NET’s generic description for truck drivers in the box “Summary Report for Tractor-Trailer Truck Drivers” (from O*NET). First, the summary description can be checked for accuracy and relevance by supervisors. Then, the list of KSAs provided by O*NET can be readily rated by incumbents (and additional KSAs may be added if needed). O*NET can also be a very useful resource for small businesses because, for most of them, conducting a job analysis may not be feasible simply because there are not sufficient numbers of people from whom to collect data. In addition, O*NET can be used when organizations expand and new positions are created. One thing needs to be clear, however: jobs change. Thus, job descriptions must be checked for accuracy and updated as needed. Job descriptions are a key prerequisite for any performance management system because they provide the criteria (i.e., yardsticks) that will be used in measuring performance. Such criteria may concern behaviors (i.e., how to perform) or results (i.e., what outcomes should result from performance). In our truck driver example, a behavioral criterion could involve the skill “equipment maintenance.” For example, a supervisor may rate the extent to which the employee “performs routine maintenance on equipment and determines when and what kind of maintenance is needed.” Regarding results, these criteria usually fall into one of the following categories: (1) quality, (2) quantity, (3) cost-effectiveness, and (4) timeliness.8 In the truck driver example, results-oriented criteria can include number of accidents (i.e., quality) and amount of load transported over a specific period of time (i.e., quantity). Some organizations are becoming aware of the importance of considering prerequisites before implementing a performance management system. Take the case of Deaconess Hospital in Oklahoma City, Oklahoma, which includes a workforce of 650 physicians and a total of 1,400 employees (http://www.deaconessokc.org/). Deaconess Hospital has been able to effectively integrate employees’ job descriptions within their performance management system. The need for this integration was reinforced by results from an employee survey revealing that employees did not know what they were being evaluated on. Therefore, with the input of employees, the hospital updated each of the 260 job descriptions. At present, each employee’s job description is part of the performance review form. The new forms incorporate task performance standards as well as behaviors specific to individual jobs. For example, a nurse may be evaluated on “how well he or she safely, timely, and respectfully administers patient medication and on his or her planning and organization skills.” In addition, Deaconess Hospital has been able to link each employee’s performance to the strategy and goals of the organization. Specifically, all employees are rated on the following core behaviors considered to be of top strategic importance for this particular organization: (1) adaptability, (2) building customer loyalty, (3) building trust, and (4) contributing to team success.9 Box 2.2 Summary Report for Tractor-Trailer Truck Drivers (from O*NET) Description Drive a tractor-trailer combination or a truck with a capacity of at least 26,000 gross vehicle weight (GVW) to transport and deliver goods, livestock, or materials in liquid, loose, or packaged form. May be required to unload truck. May require use of automated routing equipment. Requires commercial driver’s license. Tasks • Follow appropriate safety procedures when transporting dangerous goods. • Check vehicles before driving them to ensure that mechanical, safety, and emergency equipment is in good working order. • Maintain logs of working hours and of vehicle service and repair status, following applicable state and federal regulations. • Obtain receipts or signatures when loads are delivered, and collect payment for services when required. • Check all load-related documentation to ensure that it is complete and accurate. • Maneuver trucks into loading or unloading positions, following signals from loading crew as needed; check that vehicle position is correct and any special loading equipment is properly positioned. • Drive trucks with capacities greater than 3 tons, including tractor-trailer combinations, in order to transport and deliver products, livestock, or other materials. • Secure cargo for transport, using ropes, blocks, chain, binders, and/or covers. • Read bills of lading to determine assignment details. • Report vehicle defects, accidents, traffic violations, or damage to the vehicles. Knowledge • Transportation—Knowledge of principles and methods for moving people or goods by air, rail, sea, or road, including the relative costs and benefits. • Public Safety and Security—Knowledge of relevant equipment, policies, procedures, and strategies to promote effective local, state, or national security operations for the protection of people, data, property, and institutions. • English Language—Knowledge of the structure and content of the English language including the meaning and spelling of words, rules of composition, and grammar. • Law and Government—Knowledge of laws, legal codes, court procedures, precedents, government regulations, executive orders, agency rules, and the democratic political process. • Mathematics—Knowledge of arithmetic, algebra, geometry, calculus, statistics, and their applications. Skills • Equipment Maintenance—Performing routine maintenance on equipment and determining when and what kind of maintenance is needed. • Active Listening—Giving full attention to what other people are saying, taking time to understand the points being made, asking questions as appropriate, and not interrupting at inappropriate times. • Time Management—Managing one’s own time and the time of others. • Coordination—Adjusting actions in relation to others’ actions. • Judgment and Decision Making—Considering the relative costs and benefits of potential actions to choose the most appropriate one. • Reading Comprehension—Understanding written sentences and paragraphs in work-related documents. • Troubleshooting—Determining causes of operating errors and deciding what to do about it. • Speaking—Talking to others to convey information effectively. • Mathematics—Using mathematics to solve problems. • Critical Thinking—Using logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions, or approaches to problems. Abilities • Far Vision—The ability to see details at a distance. • Reaction Time—The ability to quickly respond (with the hand, finger, or foot) to a signal (sound, light, picture) when it appears. • Static Strength—The ability to exert maximum muscle force to lift, push, pull, or carry objects. • Response Orientation—The ability to choose quickly between two or more movements in response to two or more different signals (lights, sounds, pictures). It includes the speed with which the correct response is started with the hand, foot, or other body part. • Spatial Orientation—The ability to know your location in relation to the environment or to know where other objects are in relation to you. • Near Vision—The ability to see details at close range (within a few feet of the observer). • Depth Perception—The ability to judge which of several objects is closer or farther away from you, or to judge the distance between you and an object. • Extent Flexibility—The ability to bend, stretch, twist, or reach with your body, arms, and/or legs. • Multilimb Coordination—The ability to coordinate two or more limbs (e.g., two arms, two legs, or one leg and one arm) while sitting, standing, or lying down. It does not involve performing the activities while the whole body is in motion. • Manual Dexterity—The ability to quickly move your hand, your hand together with your arm, or your two hands to grasp, manipulate, or assemble objects. In summary, there are two important prerequisites that must exist before the implementation of a successful performance management system. First, there is a need to have good knowledge of the organization’s mission and strategic goals. This knowledge, combined with knowledge regarding the mission and strategic goals of their unit, allows employees to make contributions that will have a positive impact on the unit and on the organization as a whole. Second, there is a need to have good knowledge of the job in question: what tasks need to be done, how they should be done, and what KSAs are needed. Such knowledge is obtained through a job analysis. If we have good information regarding a job, then it is easier to establish criteria for job success. 2.2 Performance Planning Employees should have a thorough knowledge of the performance management system. In fact, at the beginning of each performance cycle, the supervisor and the employee meet to discuss and agree upon what needs to be done and how it should be done. This performance planning discussion includes a consideration of both results and behaviors as well as a development plan. 2.2.1 Results Results refer to what needs to be done or the outcomes an employee must produce. A consideration of results needs to include the key accountabilities, or broad areas of a job for which the employee is responsible for producing results. This information is typically obtained from the job description. A discussion of results also includes specific objectives that the employee will achieve as part of each accountability. Objectives are statements of important and measurable outcomes. Finally, discussing results also means discussing performance standards. A performance standard is a yardstick used to evaluate how well employees have achieved each objective. Performance standards provide information about acceptable and unacceptable performance (e.g., quality, quantity, cost, and time). Consider the job of university professors. Two key accountabilities are (1) teaching (preparation and delivery of instructional materials to students) and (2) research (creation and dissemination of new knowledge). An objective for teaching could be “to obtain a student evaluation of teaching performance of 3 on a 4-point scale.” An objective for research could be “to publish two articles in scholarly refereed journals per year.” Performance standards could be “to obtain a student evaluation of teaching performance of at least 2 on a 4-point scale” and “to publish at least one article in scholarly referred journals per year.” Thus, the objective is the desired level of performance, whereas the standard is usually a minimum acceptable level of performance. 2.2.2 Behaviors Although it is important to measure results, an exclusive emphasis on results can give a skewed or incomplete picture of employee performance. For example, for some jobs it may be difficult to establish precise objectives and standards. For other jobs, employees may have control over how they do their jobs but not over the results of their behaviors. For example, the sales figures of a salesperson could be affected more by the assigned sales territory than by the salesperson’s ability and performance. Behaviors, or how a job is done, thus constitute an important component of the planning phase. This is probably why results from a survey indicated that, in addition to sales figures, salespeople would like to be appraised on such behavioral criteria as communications skills and product knowledge.10 A consideration of behaviors includes discussing competencies, which are measurable clusters of KSAs that are critical in determining how results will be achieved. Examples of competencies are customer service, written or oral communication, creative thinking, and dependability. Returning to the example of the professor, assume that teaching is done online and numerous technology-related problems exist, so that Box 2.3 Performance Planning at Discover At Discover (http://www.discoverfinancial.com/data/corporate/), steps are being taken to ensure that performance planning and employee development support the organization’s business goals. Discover Financial Services is a business unit of Morgan Stanley, and operates the Discover® Card brands. The business offers a variety of cards including the Discover Classic Card, the Discover Gold Card, the Discover Platinum Card, the Miles Card from Discover Card, and an array of affinity cards. Additional services include Discover CDs and Money Market Accounts, auto insurance, and home loans. Discover is headquartered in Riverwoods, Illinois, and employs approximately 14,000 people. Discover has initiated an approach that addresses the development needs of specific business units by assigning human resources professionals to attend business meetings regularly to gain an understanding of what knowledge, skills, and abilities are required. The company asks managers to go through the same curriculum with classroom and online learning opportunities. These managers form discussion groups to discuss what they’ve learned and how it applies to the challenges of their specific role. In addition, part of the strategy includes meeting with employees to agree upon metrics in the performance planning stage, creating an action plan, and following up with evaluations and ratings to determine to what degree the learning experience was successful. In summary, Discover utilizes the various stages of the performance management process to ensure that employee development is a focus that matches the mission of providing a workplace that supports high performance.11 the resulting teaching evaluations are deficient (i.e., lower than the standard of 2). This is an example of a situation in which behaviors should be given more importance than results. In this situation, the evaluation could include competencies such as online communication skills (e.g., in the chat room). 2.2.3 Development Plan An important step before the review cycle begins is for the supervisor and employee to agree on a development plan. At a minimum, this plan should include identifying areas that need improvement and setting goals to be achieved in each area. Development plans usually include both results and behaviors. The topic of development plans is addressed in detail in Chapter 8. In summary, performance planning includes the consideration of results and behaviors and the development plan. A discussion of results needs to include key accountabilities (i.e., broad areas for which an employee is responsible), specific objectives for each key accountability (i.e., goals to be reached), and performance standards (i.e., what constitutes acceptable and unacceptable levels of performance). A discussion of behaviors needs to include competencies (i.e., clusters of KSAs). Finally, the development plan includes a description of areas that need improving and goals to be achieved in each area. Once the prerequisites are met and the planning phase has been completed, we are ready to begin the implementation of the performance management system. This includes performance execution, assessment, review, and renewal and recontracting. (Aguinis 37-47) Aguinis, Herman. Performance Management, 3rd Edition. Pearson Learning Solutions, 01/2012. VitalBook file. 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