Managers: they have the ability to rate their employees. In addition, because supervisors have something to gain from the employees’ high performance, and something to lose from low performance, they are motivated to make accurate ratings.

Peers: they have expert knowledge of job requirements, and they often have the most opportunity to observe the employee in day-to-day activities. Peers also bring a different perspective to the evaluation process, which can be valuable in gaining an overall picture of the individual’s performance.

Subordinates: valuable source of performance information when managers are evaluated. Upward feedback = managerial performance appraisal that involves subordinates’ evaluations of the manager’s behavior or skills.

Self-evaluation gives employees the opportunity to explain to their managers what they have done well and to request training for areas they believe they need to improve.

Using customer evaluations of employee performance is appropriate in two situations: + When an employee’s job requires direct service to the customer or linking the customer to other services within the company. + When the company is interested in gathering information to determine what products and services the customer wants. 360-degree appraisal = a performance appraisal process for managers that includes evaluations from a wide range of persons who interact with the manager. The process includes self-evaluations as well as evaluations from the manager’s boss, subordinates, peers, and customers.

Unconscious bias is a judgment outside of our consciousness that affects decisions based on background, culture, and personal experience.

Appraisal politics = a situation in which evaluators purposefully distort ratings to achieve personal or company goals. Appraisal politics are most likely to occur when: raters are accountable to the employee being rated; there are competing rating goals; a direct link exists between performance appraisal and highly desirable rewards. Two training approaches to reduce rating errors: 1/ Rater error training: make managers aware of rating errors and help them develop strategies for minimizing those errors. 2/ Rater accuracy training = frame-of-reference training: emphasize the multidimensional nature of performance and thoroughly familiarize raters with actual content of various performance dimensions.

Calibration meetings = meetings attended by managers in which employee performance ratings are discussed and evidence supporting the ratings is provided. The purpose of the meetings is to reduce the influence of rating errors and politics on performance appraisals.

+ Feedback should be given frequently, not once a year. + Create the right context for the discussion. + Ask the employee to rate his or her performance before the session. + Have ongoing, collaborative performance conversations. + Recognize effective performance through praise. + Focus on solving problems. + Focus feedback on behavior or results, not on the person. + Minimize criticism. + Agree to specific goals and set a date to review progress.

Ranking + Simple ranking: rank employees within their departments from highest performer to poorest performer (or best to worst). + Alternation ranking: looking at a list of employees, deciding who is the best employee, and crossing that person’s name off the list. From the remaining names, the manager decides who the worst employee is and crosses that name off the list, etc.

Forced distribution: put certain percentages of employees into predetermined categories. Employees are ranked in groups. This method helps managers tailor development activities to employees based on their performance.

Paired comparison: compare every employee with every other employee in the work group, giving an employee a score of 1 every time he or she is considered the higher performer. This method is time-consuming and will become more so as organizations become flatter with an increased span of control.

+ Graphic rating scale: point rating scale. + Mixed-standard scale: To create a mixed-standard scale, define the relevant performance dimensions and then develop statements representing good, average, and poor performance along each dimension. The rater is asked to complete the rating instrument by indicating whether the employee’s performance is above (+), at (0), or below (-) the statement.

Five techniques that rely on the behavioral approach: 1/ Critical incidents: keep a record of specific examples of effective and ineffective performance on the part of each employee. 2/ Behaviorally anchored rating scale (BARS): specifically define performance dimensions by developing behavioral anchors associated with different levels of performance. 3/ Behavioral observation scale (BOS): like a BARS, a BOS is developed from critical incidents. 4/ Organizational behavior modification (OBM): managing the behavior of employees through a formal system of behavioral feedback and reinforcement. 5/ Assessment centers: a process in which multiple raters evaluate employees’ performance on a number of exercises.

Two performance management systems that use results: 1/ Management by objectives (MBO): the top management team first defines the companys strategic goals for the coming year. 2/ Productivity measurement and evaluation systems (ProMES): motivate employees to higher levels of productivity. It is a means of measuring and feeding back productivity information to personnel.

Two fundamental characteristic: + Customer orientation + Prevention approach to errors => Improving customer satisfaction is the primary goal of the quality approach. Sales, profit margins, and behavioral ratings are often collected by managers to evaluate employees’ performance. Quality advocates suggest that the major focus of performance evaluations should be to provide employees with feedback about areas in which they can improve.

Strategic congruence is the extent to which a performance management system elicits job performance that is congruent with the organization’s strategy, goals, and culture.

Validity is the extent to which a performance measure assesses all the relevant—and only the relevant—aspects of performance. This is often referred to as content validity.

Reliability refers to the consistency of a performance measure. One important type of reliability is interrater reliability: the consistency among the individuals who evaluate the employee’s performance.

Acceptability refers to whether the people who use a performance measure accept it. Many elaborate performance measures are extremely valid and reliable, but they consume so much of managers’ time that they refuse to use it.

Specificity is the extent to which a performance measure tells employees what is expected of them and how they can meet these expectations. Specificity is relevant to both the strategic and developmental purposes of performance management.

Performance management is critical for companies to execute their talent management strategy, that is, to identify employees’ strengths and weaknesses, link employees to appropriate training and development activity, and reward good performance with pay and other incentives.

Organizations use performance management information (performance appraisals, in particular) in many administrative decisions: salary administration (pay raises), promotions, retention-termination, layoffs, and recognition of individual performance.

Develop employees who are effective in their jobs.