Empower your business with a sales performance management system in United States

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[Music] how do we manage performance within the organization the most common part of the process and the one in which we're most familiar is the performance appraisal or evaluation however the performance appraisal process is not the only thing that's done in performance management performance management is the process of identifying measuring managing and developing the performance of human resources in an organization basically we're trying to figure out how well employees perform and then ultimately improve that performance level when used correctly performance management is a systematic analysis and measurement of worker performance that we use to improve performance over time performance appraisal on the other hand is the ongoing process of evaluating employee performance notice that it's an ongoing process employees need regular feedback on their performance so should we should give it to them in routine and candid assessments new tools that we'll discuss in this course are allowing us to do this more effectively performance appraisals our reviews of employees performance over time so appraisal is just one piece of performance management it's important to note that many people don't think that performance management is fun effective or meaningful one study even noted that 95% of managers are dissatisfied with their performance management system and 90% of HR managers believe that the system doesn't yield accurate performance information still we have to struggle with a significant problem organizations legitimately use periodic appraisals to make good decisions about their employees and employee development if performance appraisals are not completed the organization doesn't have a valid and reliable set of information about its human resources and therefore has no ability to make good or objective decisions about things such as training promotions and pay raises because of this issue it's unlikely that most organizations will hit the delete button on their annual performance process until newer technologies have been proven capable of defending the organization from claims of employment discrimination note the connection between the organization's mission and objectives in the performance appraisal process here we'll briefly discuss each step of that process step one job analysis this is logically our first step if we don't know what a job consists of how can we possibly evaluate the employee's performance in that job we've already learned that to do a job analysis we should realize that the job must be based on the organization's mission and objectives the department and the job itself step two development standards and measurement methods if we don't have standards of acceptable behavior and methods of measuring performance how can we assess that performance step three in formal performance appraisal including coaching and disciplinary action performance appraisal should not simply be a once or twice a year formal interview as its definition States performance appraisal is an ongoing process while a formal evaluation may take place only once or twice a year people need regular feedback on their performance to know how they're doing step 4 prepare for and conduct a formal performance appraisal the common practice is to have a formal performance review with the boss once or sometimes twice a year using one or more of the measurement forms that we learn about in typical performance management or appraisal courses we need to understand a critically important part of each step of the performance appraisal process accurate performance measurement the American National Standards Institute ANSI has outlined minimum required elements of a performance management system for goal-setting performance review and performance improvement plans as in all areas of people management processes we must do our best to make sure that all of our performance management tools are valid and reliable in addition to validity and reliability we need to look at a couple of other characteristics of our performance measures acceptability and feasibility acceptability means that the use of the measure is satisfactory or appropriate to the people who most use it to be acceptable an evaluation tool must also be feasible the evaluation measure must be specific enough to identify what's going well and what's not the word specific means that something is explicitly identified or defined well enough that all involved completely understand the issue in performance appraisals a specific form provides enough information for everyone to understand what level of performance has been achieved by a particular employee within a particular job finally you want to make sure that your performance management system leads to the accomplishment of your organization's mission and objectives as with anything else we do in HR we need to ensure that the performance management process guides our employees towards achievement of the company's mission and objectives over time as managers making sure of this connection will allow us to reinforce employee behaviors that aim at achieving organizational goals and it will also allow us to identify for our employees things that they may be doing actively or unintentionally to harm the ability to accomplish or reach those goals the American National Standards Institute ANSI has outlined minimum required elements of a performance management system for goal-setting performance review and performance improvement plans as in all areas of people management processes we must do our best to make sure that all of our performance management tools are valid and reliable in addition to validity and reliability we need to look at a couple of other characteristics of our performance measures acceptability and feasibility acceptability means that the use of the measure is satisfactory or appropriate to the people who most use it to be acceptable an evaluation tool must also be feasible the evaluation measure must be specific enough to identify what's going well and what's not the word specific means that something is explicitly identified or defined well enough that all involved completely understand the issue in performance appraisals a specific form provides enough information for everyone to understand what level of performance has been achieved by a particular employee within a particular job finally you want to make sure that your performance management system leads to the accomplishment of your organization's mission and objectives as with anything else we do in HR we need to ensure that the performance management process guides our employees towards achievement of the company's mission and objectives over time as managers making sure of this connection will allow us to reinforce employee behaviors that aim at achieving organizational goals and will also allow us to identify for our employees things that they may be doing actively or unintentionally to harm the ability to accomplish or reach those goals traits identify the physical or psychological characteristics of a person there is evidence that traits such as inquisitiveness conscientiousness and general cognitive ability are valuable in jobs that require management and leadership skills however we must ensure that we focus on traits that have a direct relationship to the essential functions of the job and that they're within the control of the individual and that there are accurate measures many traits that most of us would likely focus on such as physical attractiveness height or extraversion actually have been shown to have very little bearing on performance in most roles if we're going to use traits and performance evaluation we must ensure that we focus on traits that have a direct relationship to the essential functions of the job being done and they have to have accurate measures in most cases it's very difficult to show that personal traits are valid and reliable measures of work performance many of us individually and as managers value certain things like enthusiasm even if enthusiasm has very little to do with the ability to do a particular job or actual results of performance certainly there are some jobs where enthusiasm is critical however being enthusiastic employee may have little to do with success in a job so if we evaluate individuals Bey and the characteristic of enthusiasm we might be making an errand judgment concerning their performance finally if our organization happened to be sued by a former employee who claimed that they were fired based on an appraisal process that was unreliable and not valid it would be very difficult to defend trade based evaluation forms due to their subjective nature author Ken Blanchard said that there are too many evaluation items that can't be objectively measured such as attitude initiative and promote ability therefore it's important to ask whether both managers and employees would agree with the measured rating as being accurate the bottom line test what we'll call the Blanchard test is this does everyone understand why they are assessed at a specific level evaluation and what it takes to get a higher rating development we should address only traits that meet bottom-line tests of having a direct and obvious objective relationship between the trait and success on the job behaviors are simply actions taken by an individual the things they do and say behavioural appraisals measure what individuals do at work not their personal characteristics is this a good option to use in the performance appraisal process as a general rule it's much better to use behaviors and appraisals than to use traits well an individual supervisor or manager may make a mistake in judgment about the traits of the employee physical actions or behaviors can be directly observed and as a result they're more likely to be a valid assessment of the individuals performance in fact evidence shows that most individuals are very comfortable with the evaluation of their performance being based on what they do not who they are in general the most useful and therefore most acceptable feedback to employees is feedback on specific job related behaviors as managers though we still need to be cognizant of the fact that a behavioral evaluation can be a poor measure of work performance unless the behaviors chosen are directly applicable to being successful on the job so as with traits the Blanchard tests asks whether an employee understands why they're being assessed at a specific level about raishin and what it takes to get a higher rating development results are simply a measure of the goals achieved through a work process is measuring the outcomes of a particular individual's job of valid and reliable measure of the person's performance results are certainly concrete measures of performance however could results of the job been skewed by factors that were outside the control of the individual who's performing the job the answer is obviously that the results could be affected by many other factors besides the individual's performance even though this is true the measurement of results is the final organizational measure of success the results produced through organizational processes provide the company with its return on investment in this case its investment in people in the organization so organizations really like to measure results results based evaluations like behavior based evaluations are typically very acceptable to both the employee in the manager employees readily accept results based appraisals because they feel that such appraisals are one of the fairest methods of analyzing their performance we can also defend this type of appraisal much more easily than we can defend other options of appraisals it tends to be very easy for the organization to go into a court room and show that an individual's results were objectively lower than those achieved by other people in the same or similar jobs if such action becomes necessary but as performance evaluation measurements on results valid and reliable the results based evaluation would most likely be highly valid and would usually be reliable assuming that we're able to take into account factors outside the individual's control that nonetheless affect job performance so as with traits and behaviors the Blanchard test asks does everyone understand why they have assessed at a particular level evaluation and what it takes to get a higher rating development but which option is best the answer is not as easy as you might think certainly results based and behavior based evaluations are more defensible due to the fact that they are more reliable and valid than trait based evaluations but we have to include a large number of factors in order to select which option is best in a particular situation for example if we need to evaluate employees who work on the assembly line we may need to evaluate behaviors such as punctuality did they show up to work on time if we have an employee who produces at least a hundred and fifty percent of the standard when they show up but they only show up two or three days a week it creates a problem for the whole assembly line in that case we may need to evaluate attendance and punctuality behaviors because the assembly line depends on everything else however if we have individuals who don't do their actual work when managers can see and measure their behaviors for example people who work from home like telecommuters and independent outside salespeople then we need to rely on results based measures other employees are often not affected by the hours of telecommuters and sales people's work it will not matter to them when they're in the office as long as they get the job done the firm will be concerned about how much they produced or sold so circumstances dictate which method we use we cannot say one method will always be superior to the other to the critical incidents method is a performance appraisal method in which a manager keeps a written record of the positive and negative performance of employees throughout the performance period there's no standard form used so it's a method here and for each of the other methods and forms let's answer two questions why and when do we use this method or form and how do we use it most formal reviews take place only once or twice a year but you don't want to wait for the formal review before you talk to your employees about how they are doing or if they're not meeting expectations you want to let them know right away what they're doing on an ongoing basis we use critical incidents to do a good assessment of the entire review period and coach during the entire review period when needed for developmental decisions we need to continually conduct informal coaching and discipline when warranted as we make notes of critical incidents to use during the formal review with clear standards and coaching you could minimize disagreements over performance during the formal performance appraisal because employees will know what's coming although critical incidents are commonly used for developmental decisions they also are used for evaluative decisions for legal purposes having a list of documented critical incidents is especially important leading up to the inevitable decision of firing an employee coaching is part of this ongoing process and it involves helping employees succeed by monitoring their performance through giving feedback to praise progress and to redirect inappropriate behavior as needed one air that inexperienced or unskilled managers tend to make in critical incidents evaluation is focusing on the negative actions of employees remember that the good balanced evaluation includes both positive and negative feedback so look for good performance not just poor performance and praise good work when you see it the management by objectives or MBO method is a process in which managers and employees jointly set objectives for the employees periodically evaluate performance and reward employees ing to results although there's a step-by-step process there's no standard form used with MBO so it's a method MBO is also referred to as work planning and review goals management goals and controls and management by results in many cases the MBO method is one of the best methods for developing employees as with the use of critical incidents employees are getting ongoing feedback on how they're doing usually a meeting scheduled at regular intervals when we use the MBO method successfully with our employees we commit to the entire process and truly involve employees rather than trying to make them believe that our objectives are theirs on an organization-wide basis MBO is not too commonly used as the sole assessment method it is more commonly used based on evaluative assessment during the development part of an employee's performance appraisal one difficult part of MBO is that different employees will have varying individual goals making MBO more difficult and time-consuming than using standard assessment forms MBO is a three step process step one set individual objectives and plans the manager sets objectives jointly with the employee the objectives are the heart of the MBO process and should be accurate measures of performance results to be accurate objectives should be smart they need to be specific measurable attainable relevant and time-based being specific measurable and time-based is fairly easy to determine in a written goal but attainable and relevant can be more difficult step 2 give feedback and evaluate performance communication is the key factor in determining MBO success or failure and employees should continually critique their own performance thus the manager and employee must communicate often to review progress the frequency of evaluation depends on the individual and the job performed however most managers do not conduct enough review sessions step 3 reward ing to performance employees performance should be measured against their objectives again jointly by both the manager and the employee employees who meet their objectives should be rewarded through recognition praise pay raises promotions and so on employees who do not meet their goals so long as the reason is not out of their control usually have rewards withheld and even punishment given when necessary the narrative method or form requires a manager to write a statement about the employees performance there may not be an actual standard form used especially for high-level professional and executive positions but there can be a form so it can be a method or a form a narrative gives the manager the opportunity to give the evaluative assessment in a written form that can go beyond simply checking a box to describe a predetermined assessment the manager can also right up a developmental plan of how an employee will improve performance in the future narratives can be used alone but they're often followed by an objective part of a form although a narrative is ongoing it's commonly used during a formal review a letter of recommendation is often an example of a narrative evaluation method how do we use the narrative method or form the system's can vary managers may be allowed to write whatever they want ie use the method or they might be required to answer questions with a written narrative about an employee's performance like using a form let's discuss both here the no form narrative method can be the only assessment method used during the formal review process but the narrative method when used alone is more commonly used with professionals and executives than with operative employees how we write the formal narrative assessment varies as writing content and styles are different a narrative based on the critical incidents and MBO results is clearly the best basis for the written assessment the narrative is often used as part of a longer form for example you might likely have seen an assessment form such as a recommendation that has a list of items to be checked off following the checklist the form may ask one or more questions requiring a narrative written statement the graphic rating skill form is a performance appraisal checklist form on which a manager simply rates performance on a continuum such as excellent good average fair and poor the continuum often includes a numerical scale for example from level one the lowest performance level to five the highest the graphic rating scale form is probably the most commonly used form during the formal performance appraisal primarily for evaluative decisions but the use of the form should lead to development decisions as well graphic rating scales can be used for many different types of jobs making them a kind of one-size-fits-all form that requires minimal time effort cost and training it's very simple and we have most likely all used one in some context of our work one of the problems with this method however is that some of us don't bother to actually read the questions based on our biases some of us just go down the list checking the same rating regardless of actual performance on those items to be fair this problem is not common with managers formally evaluating their employees however it does tend to occur when customers evaluate products or services including when students assess professors to overcome this problem we can reverse the scale from good to poor on different questions but this is unfortunately not commonly done also some who do know they should reverse the scales don't because they don't want to end up with overall ratings being pushed to the middle because people don't read the questions a behaviorally anchored rating scale bars is a performance appraisal that provides a description of each assessment along a continuum as with graphic rating scales the continuum often includes a numerical scale that runs from low to high but with a bars form each item is an analysis of a specific behavior bars forms overcome the problem of subjectivity by providing an actual description of the performance the required behaviors for each rating along the continuum rather than just one simple word that a graphic rating scale provides again the graphic rating scale can be used for many different jobs but bars forms have to be customized for every type of job as with a graphic rating scale managers simply select a level of performance along a continuum ranking is a performance appraisal method that's used to evaluate employee performance from best to worst there often is no actual standard form used and we don't always have to rank all employees managers have to make evaluative decisions such as determining who gets a raise or promotion and who gets laid off so when we have to make decisions we generally have to use some type of ranking however our ranking can and when possible should be based on other valid and reliable methods and forms managers can also use ranking for developmental purposes by letting employees know where they stand in comparison to their peers meaning managers can use rankings to motivate employees to improve their performance evaluating employees is poor overall versus their co-workers tends to be demotivational under the ranking method the manager compares an employee to other similar employees rather than to an objective standard an offshoot of ranking is the forced distribution method which is similar to grading on a curve predetermined percentages of employees are placed in various performance categories for example excellent at 5% above average at 15% average at 60% below average at 15% and poor at 5% employees are ranked in the top group usually get the most rewards like a raise or a bonus or promotion but those not in the top tend to have the least rewards or rewards withheld and the ones in the bottom group are sometimes punished which appraisal method or form is best depends on the objectives of the organization using a combination of the methods and forms is usually superior to using just one for developmental objectives the critical incidents MBO and narrative methods work well alternatively you can't decide who gets the promotion or merit raised without an evaluative method so for administrative decisions a ranking method based on the evaluative methods and especially graphic rating scales or bars forms work well remember that the success of the performance appraisal process does not lie just in the formal method or form used once or twice a year it depends on the managers human relations skills and ongoing critical incidents coaching and it also depends on effective measures of performance that are accurate enough to let everyone know why they're related to a given level evaluative and how they should improve developmental for the next assessment there are a number of different options concerning who should evaluate the individual employee and the decision needs to based on a series of factors supervisors are often one of the best and most commonly used options as an evaluator for the employee under their control if the supervisor is absent or has in frequent contact with the employee but each of the employees frequently interacts with multiple co-workers in a team or a group then peer evaluations are valuable subordinate evaluations can give us good insight into the managerial practices and potential missteps of people who oversee others virtually all of us have informally evaluated how we perceive we're doing on the job whether we actually are formally asked to do so as part of the assessment or not if an employee interacts routinely with internal or external customers we need to know how those customers feel about their interactions with the employee consider who you will have evaluate the performance of your employees it makes a difference the 360 degree evaluation analyzes individuals performance from all sides from their supervisors viewpoint from their subordinates viewpoint from their customers if applicable from their peers and from their own self evaluation the 360 degree evaluation would generally give us the most accurate analysis of the individual and their performance within the company it takes a significant amount of time for a group of individuals to evaluate one person if we use a 360 degree format unfortunately there's really no way to avoid that problem the 360 degree evaluation format tends to be the most valuable if it's used for purposes of individual development rather than to make administrative evaluative decisions a good 360 degree feedback system can provide specific suggestions about how to improve individual competencies it can also go a long way towards minimizing some of the most common problems with the performance appraisal process which we review in other courses however we can take measures to avoid these problems bias is simply a personality based tendency either towards or against something in the case of performance measurement bias is towards or against an individual employee we all have biases but supervisors especially cannot afford to allow their biases to enter into their evaluation of subordinates stereotyping is mentally classifying a person into an affinity group and then identifying the person as having the same assumed characteristics of the group though stereotyping is almost always assumed to be negative there are many incidents of positive stereotypes halo err occurs when the evaluator forms a generally positive impression of an individual and then artificially extends that general impression to many of the individuals categories of performance these airs occur in three forms sensitivity or strictness central tendency and leniency they're based on a standard normal distribution or the bell curve that we all know so well and are familiar with in sensitivity or strictness err the rater evaluates everybody or nearly everyone as below average central tendency error occurs when the rater evaluates everyone under their control as average meaning nobody is rated as either really good or really bad finally leniency err occurs when Raiders evaluate everyone as above-average meaning that it's basically a form of grade inflation so we need to give a range of evaluations because we really aren't all equal in our levels of performance and everyone can't be the worst or the best similarity err also called like me occur is when the rater gives better evaluations to subordinates whom they consider more similar to themselves and poorer evaluations to subordinates who they consider to be different from themselves proximity heir states that similar marks may be given to items that are near in other words proximate to each other on the performance appraisal form regardless of differences in performance on those measures recency err occurs when the Raider uses only the last few weeks of a rating period as evidence when putting together performance ratings contrast err happens when the Raider compares and contrasts performance between two employees rather than using absolute measures of performance to assess each employee attribution air is a process in which an individual makes assumptions about the reasons or motivations such as attitudes values or beliefs for an observed behavior as you can see there are significant numbers of ways that the performance appraisal can fail to provide an accurate assessment of the capabilities and behaviors of individual employees thus far we've provided only simple solutions to help us overcome these problems for individuals or through the performance management process but how can an organization avoid these problems on an organization-wide basis throughout the performance appraisal process itself luckily we can take a number of basic steps to minimize the negative issues that occur in the performance process all we have to do is look at the problem noted and we can fairly quickly come up with some possible solutions to at least the majority of those problems using some methods limit the potential for appraisal processes to go astray by developing accurate performance measurements training evaluators and using multiple raters because the evaluative interview is the basis for the developmental interview it should be conducted first when preparing for an evaluative interview follow the steps outlined in this model from appointment through predicting reactions then opening the interview through concluding as you conduct the actual interview our evaluation should be fair if we have regular coaching conversations with our employees they know where they stand and our preparation is mostly done except for filling out the form so our relationship with the employee will directly affect the outcome employees should also critique their own performance through a self-assessment using that form step one of our model is to simply set up the meeting step 2 has the employee used the form to conduct a self-assessment and in step 3 we to assess the employee's performance using that form in keeping with the balanced evaluation in step 4 we identify both strengths and areas for improvement that serves the basis for the developmental interview finally step 5 involves predicting employee reactions to our assessment and planning how to handle them using critical incidents will help support our assessment when employees disagree and don't forget that the balanced test states that both you and the employee should be able to explain and agree on the employee's level of performance during the interview encourage the employee to talk and also listen to the critique of their performance our model lists the steps for conducting an evaluative performance appraisal interview in step 1 we open the meeting with some small talk to put the person at ease then in step 2 we go over our evaluation of the items on the assessment form in step 3 we identify the employees strengths and weaknesses discuss them and agree on them finally in step 4 we conclude the interview which may involve making an appointment for the developmental interview during this process employees should be open to negative feedback even if they don't agree with it they should not make excuses or blame others if they don't agree with the assessment they may say something like thanks for the feedback but I don't agree with it because giving objective reasons for the disagreement is fine as long as they do it without being argumentative or disrespectful if there's such a disagreement we might want to schedule a follow-up meeting with the employee so that we and they may gather facts that support our or their stance on the assessment after the employees performance evaluation is completed you should prepare for the developmental interview based on targeted areas for improvement that you already discussed in the evaluative interview yes as a manager you're busy and you may question the need for coaching and the cost of separate formal developmental interviews but the benefit of separating time for developing employees will lead to increase performance and lower turnover in your organization to prepare for the interview follow the steps in this model which begins with simply setting up a time to conduct the interview as stated in step 2 have the employees come up with their own objectives and strategies for improvement and also develop your own for them in step 3 in step 1 we open the interview with some small talk then we set objectives and then follow up with employees on meeting those objectives we conclude our meeting by ensuring that employees know how they can improve and what they're working towards in terms of their development it's important to end step 5 by concluding the interview with some positive encouragement to reach objectives [Music] you