PERFORMANCE MANAGEMENT S E C O N D E D I T I O N Hermann Agninmins The Busines School University of Colorado Denver (PI Pearson Education International
BRIEF CONTENTS PART I: STRATEGIC AND GENERAL CONSIDERATIONS Chapter 1 Performance Management and Reward Systems in Context 1 Chapter 2 Performance Management Process 30 Chapter 3 Performance Management and Strategic Planning 50 PART II: SYSTEM IMPLEMENTATION 77 Chapter 4 Defining Performance and Choosing a Measurement Approach 77 Chapter 5 Measuring Results and Behaviors 94 Chapter 6 Gathering Performance Information 118 Chapter 7 Implementing a Performance Management System 153 PART III: EMPLOYEE DEVELOPMENT 179 Chapter 8 Performances Management and Employee Development 179 Chapter 9 Performance Management Skills 206 PART IV: REWARD SYSTEMS, LEGAL ISSUES, AND TEAM PERFORMANCE MANAGEMENT 239 Chapter 10 Reward Systems and Legal Issues 239 Chapter 11 Managing Team Performance 268
> - CONTENTS Preface xi Acknowledgments About the Author xvi xvi PART I: STRATEGIC AND GENERAL CONSIDERATIONS 1 CHAPTER 1 Performance Management and Reward Systems in Context 1 1.1 Definition of Performance Management (PM) 2 1.2 The Performance Management Contribution 4 1.3 Disadvantages/Dangers of Poorly Implemented PM Systems 7 1.4 Definition of Reward Systems 9 1.4.1 Base Pay 10 1.4.2 Cost-of-Living Adjustments and Contingent Pay 10 1.4.3 Short-Term Incentives 10 1.4.4 Long-Term Incentives 10 1.4.5 Income Protection 11 1.4.6 Work/Life Focus 12 1.4.7 Allowances 12 1.4.8 Relational Returns 12 1.5 Aims and Role of PM Systems 13 7.5.7 Strategic Purpose 14 1.5.2 Administrative Purpose 15 1.5.3 Informational Purpose 15 1.5.4 Developmental Purpose 15 1.5.5 Organizational Maintenance Purpose 15 1.5.6 Documentational Purpose 16 1.6 Characteristics of an Ideal PM System 17 1.7 Integration with Other Human Resources and Development Activities 21 Case Study 1-1 Reality Check: Ideal Versus Actual Performance Management System 24 Case Study 1-2 Performance Management at Network Solutions, Inc. 26 CHAPTER 2 Performance Management Process 30 ( 2.1 Prerequisites 31 2.2 Performance Planning 38
1 Contents vio 2.2.7 Results 38 2.2.2 Behaviors 39 2.2.3 Development Plan 39 2.3 Performance Execution 40 2.4 Performance Assessment 41 2.5 Performance Review 42 2.6 Performance Renewal and Recontracting 44 Case Study 2-1 Job Analysis Exercise 47 Case Study 2-2 Disrupted Links in the Performance Management Process at "Omega, Inc." 47 Case Study 2-3 Performance Management at the University of Ghana 48 CHAPTER 3 Performance Management and Strategic Planning 50 3.1 Definition and Purposes of Strategic Planning 51 3.2 Process of Linking Performance Management to the Strategic Plan 52 3.2.1 Strategic Planning 54 3.2.2 Developing Strategic Plans at the Unit Level 65 3.2.3 Job Descriptions 66 3.2.4 Individual and Team Performance 67 3.3 Building Support 69 Case Study 3-1 Evaluating Vision and Mission Statements at Harley-Davidson 73 Case Study 3-2 filbert's Mission Statement Generator 74 Case Study 3-3 Linking Individual with Unit and Organizational " *v v Priorities 74 PART II: SYSTEM IMPLEMENTATION 77 CHAPTER 4 Defining Performance and Choosing a Measurement Approach 77 4.1 Defining Performance 78 4.2 Determinants of Performance 78 4.2.7 Implications for Addressing Performance Problems 80 4.2.2 Factors Influencing Determinants of Performance 80 4.3 Performance Dimensions 81 4.4 Approaches to Measuring Performance 83 4.4.1 Trait Approach 84 4.4.2 Behavior Approach 85 4.4.3 Results Approach 87 Case Study 4-1 Diagnosing the Causes of Poor Performance 91 Case Study 4-2 Differentiating Task from Contextual Performance 91 { Case Study 4-3 Choosing a Performance Measurement Approach at Paychex, Inc. 92
viii Contents CHAPTER 5 Measuring Results and Behaviors 94 5.1 Measuring Results 95 5.7.7 Determining Accountabilities 95 5.1.2 Determining Objectives 97 5.1.3 Determining Performance Standards 98 5.2 Measuring Behaviors 100 5.2.7 Comparative Systems 103 5.2.2 Absolute Systems 106 Case Study 5-1 Accountabilities, Objectives, and Standards 113 Case Study 5-2 Evaluating Objectives and Standards 114 Case Study 5-3 Measuring Competencies at the Department of Transportation 114 Case Study 5-4 Creating BARS-Based Graphic Rating Scales for Evaluating Business Student Performance in Team Projects 115 CHAPTER 6 Gathering Performance Information 118 6.1 Appraisal Forms 119 6.2 Characteristics of Appraisal Forms 125 6.3 Determining Overall Rating 128 6.4 Appraisal Period and Number of Meetings 131 6.5 Who Should Provide Performance Information? 134 6.5.7 Supervisors 134 6.5*2 Peers 135 6.5>3h Subordinates 136 6.5.4 "Self 136 6.5.5 Customers 137 6.5.6 Disagreement Across Sources: Is This a Problem? 137 6.6 A Model of Rater Motivation 138 6.7 Preventing Rating Distortion Through Rater Training Programs 141 Case Study 6-1 Evaluating the Appraisal Form Used by a Grocery Retailer 145 Case Study 6-2 Judgmental and Mechanical Methods of Assigning Overall Performance Score at The Daily Planet 147 Case Study 6-3 Minimizing Intentional and Unintentional Rating Errors 149 CHAPTER 7 Implementing a Performance Management System 153 7.1 Preparation: Communication, Appeals Process, Training Programs, and Pilot Testing 154 7.2 Communication Plan 155
Contents ox 7.3 Appeals Process 159 7.4 Training Programs for the Acquisition of Required Skills 161 7.4.1 Rater Error Training 162 7.4.2 Frame of Reference Training 165 7.4.3 Behavioral Observation Training 166 7.4.4 Self-Leadership Training 167 7.5 Pilot Testing 168 7.6 Ongoing Monitoring and Evaluation 170 Case Study 7-1 Implementing a Performance Management Communication Plan at Accounting, Inc. 175 Case Study 7-2 Implementing an Appeals Process at Accounting, Inc. 175 Case Study 7-3 Evaluation of Performance Management System at Accounting, Inc. 176 PART III: EMPLOYEE DEVELOPMENT 179 CHAPTER 8 Performance Management and Employee Development 179 8.1 Personal Developmental Plans 180 8.1.1 Developmental Plan Objectives 180 8.1.2 Content of Developmental Plan 183 8.1.3 Developmental Activities 184 8.2 Direct Supervisor's Role 186 8.3 360-Degree Feedback Systems 188 8.3.1 Advantages of 360-Degree Feedback Systems 196 8.3.2 Risks of Implementing 360-Degree Feedback Systems 198 8.3.3 Characteristics of a Good System 198 Case Study^-l Developmental Plan Form at Old Dominion University 203 Case Study 8-2 Evaluation of a 360-Degree Feedback System Demo 203 Case Study 8-3 Implementation of 360-Degree Feedback System at Ridge Intellectual 204 CHAPTER 9 Performance Management Skills 206 9.1 Coaching 207 9.2 Coaching Styles 212 9.3 Coaching Process 213 9.3.1 Observation and Documentation of Developmental Behavior and Outcomes 215 9.3.2 Giving Feedback 218 9.4 Performance Review Meetings 226 Case Study 9-1 Was Robert Eaton a Good Coach? 233 / Case Study 9-2 What Is Your Coaching Style? 234 s Case Study 9-3 Preventing Defensiveness 236
x Contents PART IV: 1 REWARD SYSTEMS, LEGAL ISSUES, AND TEAM PERFORMANCE MANAGEMENT 239 CHAPTER 10 Reward Systems and Legal Issues 239 10.1 Traditional and Contingent Pay Plans 240 10.2 Reasons for Introducing Contingent Pay Plans 241 10.3 Possible Problems Associated with Contingent Pay Plans 243 10.4 Selecting a Contingent Pay Plan 245 10.5 Putting Pay in Context 248 10.6 Pay Structures 252 70.6.7 Job Evaluation 252 10.6.2 Broad Banding 255 10.7 Performance Management and the Law 255 10.8 Some Legal Principles Affecting Performance Management 256 10.9 Laws Affecting Performance Management 259 Case Study 10-1 Making the Case for a CP Plan at Architects, Inc. 264 Case Study 10-2 Selecting a CP Plan at Dow AgroSciences 264 Case Study 10-3 Possible Illegal Discrimination at Tractors, Inc. 265 CHAPTER 11 Managing Team Performance 268 11.1 Definition and Importance of Teams 268 11.2 Types of Teams and Implications for Performance Management 270 11.3 Purposes and Challenges of Team Performance Management 272 11.4 Including Team Performance in the Performance Management System 272 1114.1 Prerequisites 273 11.4.2 Performance Planning 275 11.4.3 Performance Execution 276 11.4.4 Performance Assessment 276 11.4.5 Performance Review 278 11.4.6 Performance Renewal and Recontracting 279 11.5 Rewarding Team Performance 280 Case Study 11-1 Not All Teams Are Created Equal 282 Case Study 11-2 Team Performance Management at Duke University Health Systems 283 Case Study 11-3 Team-Based Rewards for the State of Georgia 285 Name Index 288 Subject Index 290 / Author Index 294