Applied Psychology in

Human Resource
Management
seventh edition
Cascio & Aguinis

PowerPoint Slides developed by

Ms. Elizabeth Freeman
University of South Carolina Upstate

5-1
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 Chapter 5

Performance
Management

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 Performance Management
Systematic evaluation
individual or group
strengths and results
any given job or position
within an organization

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 Performance Management
Continuous process
identifying
measuring
developing
an employee
or groups of employees
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 Performance Management

Reviews (appraisals)
* occur at regular intervals
* observations & judgments
* include feedback

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 Annual Performance Appraisals
Adult report cards

Earn employees rewards

Increases in hourly wages
Increases in salary
Renewal of contracts
Increases in vacation time
Recognition awards
Profit sharing
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 To minimize observation
and judgments bias

Collect multiple observations

Collect multiple judgments
Train the raters
Standardize the methods
Rate the raters

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 Performance Management

supports 8 purposes

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 1st of 8

Strategic – links
employee functions to
organizations’ mission
and goals

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 2nd of 8

Communication –
employees know how
well they are
performing
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 3rd of 8

Employment decisions /
predictions –
promotions, transfers,
training, terminations,
discipline, merit
recognition
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 4th of 8

Results can be used in

test validation criteria
as in Human Resources
research

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 5th of 8
Developmental for
identifying
organizational
training needs – help
establish
goals/objectives for
training programs
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 6th of 8

Developmental for
employees –
provides a way to
give & receive
feedback

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 7th of 8

Developmental for the

organization -
diagnoses, maintains,
and develops

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 8th of 8

Document & record

HR decisions
legal requirements

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 For performance
appraisers
5 realities

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 1st reality
Appraisals happen in
all organizations
large/small
public/private
local/multinational

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 2nd reality

Appraisals have
personal and
organizational
consequences

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 3rd reality

As job complexity
increases, accuracy
with ratings becomes
more difficult

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 4th reality

Appraisals are
inherently political

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 5th reality
Implementation &
administration
require time and effort
must be believed in
by employees &
by supervision

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 Potential barriers

Organizational
Political
Interpersonal
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 Organizational Barriers

Common:
prior decisions,
material defects,
design flaws
May be overcome through
group cohesiveness
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 Organizational Barriers

Special: person, event, or

subgroup may cause
barriers
May be overcome by
adapting & compensating
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 Political Barriers

Accuracy – how important

Motivation – how important
Reward – how important

Managers may use system to

make themselves look good
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 Interpersonal Barriers

Misperception
about actual standards
Accurate ratings
may intimidate rater
Objection to superior -
subordinate relationship
Preference
for continuous coaching
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 Effective
Performance
Management
Systems
have 9 basic
requirements

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 9 REQUIREMENTS
1. Congruence
2. Thorough
3. Practical
4. Meaningful
5. Specific
6. Discriminant
7. Reliable and valid
8. Inclusive
9. Fair & acceptable
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 1st of 9
Congruence with
organizational goals

Performance Management
Systems
should measure those
behaviors that
help the organization
meet its goals

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 2nd of 9

Thoroughness

All employees
All organizational behaviors
Entire time period

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 3rd of 9

Practicality

Available
Plausible
Acceptable
Easy to use
More benefits than costs

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 4th of 9
Meaningfulness
Measures behaviors that
employee controls
Occurs at predictable intervals
Adds to employee and evaluator
skills
Used to determine specific
decisions
Perceived organizationally as
important
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 5th of 9
Specificity

Rater & ratee know

what is expected
how expectations are
measured
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 6th of 9
Discriminability

Making it clear what the

differences are between
good performance and
unacceptable performance

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 7th of 9
Reliability & Validity

Consistent over time & raters

Accurate measurement of
past performance and of
future expectations

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 8th of 9
Inclusiveness
Raters & ratees
design the system
Ratees allowed
to rate own performance
Rater & ratee actively
participate
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 9th of 9

Fair & Acceptable

Raters & ratees believe

process and outcomes
are just and equitable
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 Performance Appraisals
include 2 equally
important processes
1. Observations of
behaviors
2. Judgments about the
value of behaviors
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 1 st Observations
detection
perception
recall
recognition

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 2nd Judgments

categorize
integrate
evaluate

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 Performance Appraisals
are end result
3-part sequence

Job Analysis
Performance Standards
Performance Evaluations

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 WHO SHOULD BE THE RATERS?
Generally … the supervisor
controls consequences
(rewards / punishments)

360-degree systems increase

information but supervisor makes
ultimate decision

Teams require different style

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 For teams or infrequent
supervisor interactions
Peer process
Peer nominations –
good for high & low performances
Peer ratings –
good for giving feedback
Peer rankings – good for
discriminating performance levels
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 Other Peer advantages
Reliable
Valid
Free from various biases
Peer disadvantages
Friendship bias
Impacts cohesiveness,
satisfaction & future ratings
(revenge ratings)
Common method variance
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 What is Common Method
Variance?

Variation in performance
ratings due to method rather
than actual performance

Can minimize by improving:

Procedures
Statistical manipulations
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 When subordinates rate
managers

Delegation
Planning & organizing
Communication
Leadership style

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 When subordinates rate
managers

Add strength by averaging

Anonymity very important
Purpose of ratings important
Salary & promotions
Accurate for development

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 Self ratings
Improve motivation & acceptance
of process
May show more bias, leniency
May show less variability,
less agreement
with other rating sources
Cultural influence may be present
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 To strengthen self ratings

Rate relative to others in their

position
Allow practice with self
ratings
Assure confidentiality
Focus on the future

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 Clients as raters

Can rate service

Determine promotions,
training, transfers
Assist with HR research
Assist with development
planning
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 When other sources or
groups rate

May influence supervisory ratings

May raise high ratings higher
May lower a good rating
May remember specifics better
May show more response bias

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 Remember

When groups rate groups,

the purpose of the group

and the purpose of the rating
impact which rating method is
most useful

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 Agreement & Equivalence of
Ratings across Sources
Validity statistics
for agreement & equivalence
are not high (.14 to .22)
Important to note
definition of what is
to be measured will increase
the agreement of ratings
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 Judgmental biases in
rating?

Leniency versus severity

Central Tendency
Halo

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 To minimize occurrence of
leniency & severity:

force normal distributions

require rank ordering
of subordinates
schedule frequent
feedback sessions
hold supervisors
accountable for results
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 Others fear being too lenient or
severe and opt for a middle
ground…everyone is average
To minimize occurrence of central
tendency:
Make sure raters understand
meanings of the rankings
Assist raters’ beliefs in
usefulness of the ratings
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 Another potential bias

Haloing – general impression

rather than fact based

Research mixed as to occurrence

and to rating accuracy

Some believe type of scale

will impact the haloing effect
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 Performance Measurement
Categories

Objective
versus Subjective
Relative
versus Absolute

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 Objective versus Subjective

Objective
Production Data –
performance outcomes
Employment Data – may not exist

Weaknesses
Performance variations
Situational influence

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 Objective versus Subjective

Subjective
May reflect judgment biases
May classify as
relative or absolute

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 Relative versus Absolute
Relative – compared to others

Simple rankings
Alternation rankings
Paired comparisons
Forced distributions

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 Relative versus Absolute
Absolute – compared to self

Narrative essay
Behavioral checklist
Forced choice system
Critical incidents
Graphic rating scale
Behaviorally anchored scale

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 Team Performances
Individual performance important

Types of Team important

Work or service – routine
Project – specific work
Network – technology
dependent

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 Team Performances

If social loafing exists,

commitment to team
disappears

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 Final Points

1. Rater Training goals

Improve observational skills
Reduce judgmental biases
Improve communication skills

One of best Rater Training

Methods
Frame of Reference (FOR)
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 Final Points

2. Personal Development – Goal

Setting
Communicate Frequently
Get Training in Appraisal
Judge Self First Encourage
Allow Subordinate Participation
Use Priming Information
Be Warm & Encouraging
Judge Performance
Tie Rewards to Performance
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 All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United
States of America.

Copyright © 2011 Pearson Education, Inc.

publishing as Prentice Hall
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