PERFORMANCE MANAGEMENT

MODULE 5.
PERFORMANCE
MANAGEMENT
IMPLEMENTATION

Reference:

Aguinis, Herman (2013). Performance Management, 3e. Pearson

Education, Inc.

Jaika Almira R. Agena

INSTRUCTOR
MODULE CONTENT
This module is intended for the discussion of the
topics on the communication process, appeals
process, training programs to minimize raters'
errors, pilot testing, and various problems related
to online implementation of performance
management.

LEARNING OBJECTIVES
5-1 Identify and understand the necessary steps
to take prior to performance system
implementation
5-2 Describe the types of errors in rating
performance and recognize the training programs
to minimize rater’s errors.
5-3 Explain the importance of conducting pilot
testing before actual implementation
5-4 Identify issues involved in an online
performance management system
PREPARING TO LAUNCH A
PERFORMANCE MANAGEMENT SYSTEM
There are crucial steps to be taken prior to the launching of a performance
management system. These include implementing a communication plan, an appeals
process, training programs for raters, and pilot testing the system to make sure any
glitches are addressed.

A successful implementation of the system requires a clear understanding of how the

system works and a clear understanding of its benefits from the different
perspectives of all involved. This means that for PMS to be successful, it should have
a wide organizational support and acceptance.

COMMUNICATION PLAN

Organizations often design a communication plan to ensure that information is

widely disseminated and that correct information is passed to stakeholders. A good
communication plan answers the following questions:
What is performance management? The communication plan must include
providing general information about PM, how PMS is implemented in other
organizations, and other goals of PMS.

How does performance management fit into our strategy? Information about the
relationship between PM and strategic planning should be provided. This
information should provide how PMS will help accomplish strategic goals.

What's in it for me? The communication plan should include the benefits of
implementing PM for all those involved.

How does it work? There should be a detailed description of the PM process,

and timeline: ie. when will meetings take place, what the purposes of each
meeting are, and when decisions about rewards will be made.

What are my responsibilities? The communication plan should also include

information on the role and responsibilities of each person involved at each
stage of the process. I.e. the responsibilities of employees and supervisors in
the PM process.

How is performance management related to other initiatives? The

communication plan should also include information on the relationship
between PM and other initiatives such as training, promotion, and succession
planning.
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In summary, a communication plan must be able detailed and must be able to answer
all or most of the important questions. However, it is important to take note that
even though the information has been made available, it does not necessarily mean
acceptance by all stakeholders. This is because people have biases with regard to the
information that is taken in, and how it is processed. Specifically, there are three
types of biases:

Selection exposure. This is the tendency to expose

our minds only to ideas with which we already
agree on.

Selective perception. This is the tendency to

perceive a piece of information as meaning what we
would like it to mean even though the information,
as intended by the communicator, may mean the
exact opposite.

Selective retention. This is the tendency to

remember only those pieces of information with
which we already agree.

These biases can easily render a communication plan ineffective. Fortunately, there
are several ways to minimize the negative impact of these biases.

Involve employees. Employees should be involved in the design of the system.

Understand employee needs. Provide a personal, clear, and convincing answer to
the "What's in it for me?" question.
Strike first. Create a positive attitude toward the new performance system before
any negative attitudes and rumors are created.
Provide facts and consequences. Don't let users draw their own conclusions
because they may differ from yours.
Put it in writing. Create documentation, which can be made available online,
describing the system.
Use multiple channels of communication. Use multiple methods of
communication such as meetings, e-mail, and paper communication. Make sure
that all channels convey consistent information.
Use credible communicators. It helps id those delivering the communication and
endorsing the system are regarded as key and powerful organizational players.
Say it, and then say it again. Repeat the information frequently.
PREPARING TO LAUNCH A
PERFORMANCE MANAGEMENT SYSTEM
APPEALS PROCESS

Another process to prepare before launching a performance management system is

the appeals process. The inclusion of an appeals process is important in gaining
employee acceptance for the PMS because it allows employees to understand that if
there is a disagreement regarding performance ratings or any resulting decisions,
then such disagreements can be resolved in an amicable and nonretaliatory way.

When an appeals process is in place, employees are able to question two things:

Judgmental issues. These issues center on the validity of

performance evaluation. I.e., an employee may believe that a
manager's performance ratings for that employee do not reflect
his actual performance.

Administrative issues. These issues involve concerns whether the

policies and procedures were followed. I.e., an employee may
argue that a supervisor did not meet with them as frequently as
with other employees.; or that the feedback they received is not
as thorough as others received.

TRAINING PROGRAMS FOR THE ACQUISITION OF REQUIRED SKILLS

Training the raters is another step necessary in preparing for the launching of PMS.
These trainings doesn't only provide participants in their PMS with the needed skills
and tools, but it also help increase satisfaction with the system.

Rater error training (RET). The goal of rater error training is to

make raters aware of what rating errors they are likely to make
and help them develop strategies to minimize those errors. The
goal is to increase rating accuracy by making raters aware of the
unintentional errors they are likely to make.

RET does not guarantee increased accuracy. But it may be useful

to expose raters to the range of possible errors.
PREPARING TO LAUNCH A
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RATER ERRORS
Similar-to-me error. Supervisors are more likely to give higher performance
ratings to those employees who are perceived to be more similar to them in terms
of attitudes, preferences, personality, and demographic variables including race
and gender.
Contrast error. Supervisors compare individuals with one another instead of
against predetermined standards.
Leniency error. This occurs when raters assign high (lenient) ratings most or all
employees.
Severity error. Raters assign low (severe) ratings to more or all employees.
Central tendency error. This happens when raters use only the middle points on
the rating scales and avoid using the extremes. This is intentional and mainly
caused by supervisor's desire to play it safe.
Halo error. This happens when raters fail to distinguish among the different
aspects of performance being rated.
Primacy error. This happens when performance evaluation in influenced mainly by
information collected the initial phases of the review period.

Table 5-1. Errors likely to be made in providing performance

ratings.

Unintentional Intentional

Similar to me Leniency

Contrast Severity

Halo Central tendency

Primacy

Recency

Negativity

First impression

Spillover

Stereotype

Attribution
PREPARING TO LAUNCH A
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RATER ERRORS
Recency error. This happens when the performance evaluation in influenced
mainly by information gathered during the last portion of the review period.
Negativity error. This happens when raters place more weight on negative
information than on positive and neutral information.
First impression error. This occurs when raters make an initial favorable or
unfavorable judgment about an employee and then ignore subsequent information
that does not support the initial impression.
Spillover error. This occurs when scores from previous review periods unjustly
influence current ratings.
Stereotype error. This occurs when supervisor has an oversimplified view of
individuals based on group membership. This type of error can also lead to biased
evaluations of performance when an individual violates stereotypical norms such
as when they work in non-traditional roles.
Attribution error. This happens when a supervisor attributes poor performance to
an employee's dispositional tendencies.

FRAME OF REFERENCE TRAINING

Frame of reference (FOR) training helps improve rater accuracy by thoroughly
familiarizing raters with the various performance dimensions to be assessed. The
overall goal is to give raters skills so that they can provide accurate ratings of each
employee on each dimensions by developing a common FOR.

FOR training programs include the following formal steps:

1. Raters are told that they will evaluate the performance of three employees on three
separate performance dimensions.
2. Raters are given an appraisal form and instructed to read it as the trainer reads aloud the
definition for each of the dimensions and scale anchors.
3. The trainer discusses various employee behaviors that illustrate various performance
levels for each rating scale included in the form. The goal is to create a common
performance theory (frame of reference) among raters so that they will agree on the
appropriate performance dimension and effectiveness level for different behaviors.
4. Participants are shown a videotape of a practice vignette, including behaviors related to
the performance dimensions being rated, and are asked to evaluate the employee’s
performance using the scales provided.
5. Ratings provided by each participant are shared with the rest of the group and discussed.
The trainer seeks to identify which behaviors participants used to decide on their
assigned ratings and to clarify any discrepancies among the ratings.
6. The trainer provides feedback to participants, explaining why the employee should
receive a certain rating (target score) on each dimension, and shows discrepancies
between the target score and the score given by each trainee.
PREPARING TO LAUNCH A
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BEHAVIORAL OBSERVATION TRAINING

Behavioral observation (BO) training is another type of

program implemented to minimize unintentional rating
errors. BO training focuses on how raters observe, store,
recall, and use information about performance.
Fundamentally, this type of training improves raters' skills at
observing performance.

SELF-LEADERSHIP TRAINING
The goal of self-leadership (SL) training is to improve a
rater's confidence in her ability to manage performance. The
training techniques include positive self-talk, mental
imagery, and positive beliefs and thought patterns.

SL training has become a popular tool in the

context of performance management systems
and as a type of training program beneficial for
supervisors even when they are not necessarily
involved in a PMS.

Designing an SL training program involves the following steps:

1. Observe and record existing beliefs and assumptions, self-talk, and mental imagery
patterns. For example, what are the beliefs about the performance management system?
How do managers visualize their role in the performance management system? Do they
believe they have the capacity to observe and record performance accurately?
2. Analyze the functionality and constructiveness of the beliefs, self-talk, and imagery
patterns uncovered in step 1. For example, are the beliefs about the system detrimental
to the system’s expected success?
3. Identify or develop more functional and constructive beliefs and assumptions, self-
verbalizations, and mental images to substitute for dysfunctional ones; for example,
develop images of employees being satisfied, as opposed to defensive and
confrontational, after receiving performance feedback from their supervisors.
4. Substitute the more functional thinking for the dysfunctional thoughts experienced in
actual situations. For example, more constructive assumptions, ways of talking to oneself,
and mental images of the likely outcome of a performance discussion with an employee
can be worked out and written down on paper.
5. Continue monitoring and maintaining beliefs, self-verbalizations, and mental images over
time
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A related type of training program is labeled self-efficacy training for raters (SET-R).
The goal of this type of training is to decrease a rater's discomfort with the
interpersonal demands of PM and to enhance a manager's belief that he has the
necessary skills to manage employees' performance.

Designing an SET-R training program involves the following steps:

1. . Raters watch a videotape of a vicarious success experience including a manager
conducting a successful performance review meeting with a subordinate.
2. Raters engage in a follow-up discussion of the specific behaviors observed in the
videotape that contributed to the meeting’s success. This follow-up discussion has the
dual goals of (1) focusing the raters’ attention on the techniques used by the videotaped
manager to convey negative feedback and (2) allowing for an opportunity to persuade
raters that they too would be able to conduct such a successful meeting.
3. Raters participate in a role-play exercise that requires providing feedback to an
employee. This role-play exercise is repeated until raters demonstrate an appropriate
level of mastery

Raters are likely to make both intentional and unintentional errors when providing
performance information. These are summarized in Table 5-1. Intentional errors are
largely due to motivational issues wherein in some cases, raters see more benefits in
distorting ratings than in providing accurate information. Unintentional errors are
largely due to cognitive biases that are the product of the complex tasks of
observing, encoding, storing, and retrieving performance information.

PILOT TESTING

Before the PMS is implemented formally, it is a good idea to test a version of the
entire system so that adjustments and revisions can be made as needed. It should
therefore implement the system in its entirety, from meetings taking place between
supervisor and employee, up to providing feedback.

Reasons for conducting pilot test includes:

1. Pilot tests allows organizations to gain information from the perspective of the
system's users on how well the system works.
2. Pilot tests are another way to achieve early acceptance from a small group who
can then act as champions for the PMS.
3. End users are likely to have a higher system acceptance rate knowing that
stakeholders in the company had a say in its design, rather than feeling that the
system was created by HR department alone.
PREPARING TO LAUNCH A
PERFORMANCE MANAGEMENT SYSTEM
Another important aspect to consider when doing pilot tests is choosing the
participating groups. Managers who will be participating must be willing to invest in
resources required to do the pilot test. The group should also be sufficiently large
and representative of the entire organization so that the reactions will be
generalizable to the rest of the organization.

Pilot testing the system can provide huge savings and identify potential problems
before they become irreversible and the credibility of the system is ruined
permanently.

ONLINE IMPLEMENTATION

The implementation of much of the interventions can be facilitated by doing so

online.

An important advantage of doing PM online is that the system can be linked to other
HR functions such as training and selection. Another advantage is that it is easier to
monitor unit-level and organization-level trends over time. Another advantage is
automation.

However, in spite of these benefits, it is

important to evaluate whether the quality of
evaluations improves and whether users are
satisfied with the system.

An important issue to keep in mind is that tools

are simply a type of medium. Taking advantage
of online applications can help speed up
processes, lower cost, and gather and
disseminate information faster and more
effectively. However, if systems are not
implemented following best practices will not
necessarily improve by using online
components.
END OF MODULE TEST
CASE ANALYSIS: IMPLEMENTING A PERFROMANCE MANAGEMENT
COMMUNICATION PLAN AT ACCOUNTING, INC.

Read the situation below, and answer the questions that follow.

Accounting, Inc. is a consulting and accounting firm headquartered in

Amsterdam, the Netherlands. Recently, Accounting, Inc. implemented a
performance management system. The first step in the implementation of the
new system was the development of a set of core competencies that would be
used to evaluate most employees regardless of function or level. In addition,
each employee was evaluated using more job-specific performance dimensions.

As the first step in the communication plan, the employees received

individual e-mail messages asking them to define what the core competencies
meant to them and to give descriptions and examples of how each of the core
competencies played out in their specific positions. Next, the company held
meetings, handed out frequently asked questions (FAQs) sheets, and placed
posters around the company detailing how the core competencies were related
to the organization’s strategic priorities and how performance scores would be
related to monetary rewards. In these communications, Accounting, Inc.
detailed how the performance system worked, how the raters were chosen, how
performance feedback was used, and other details about the system. The
information also outlined the benefits employees could expect from the new
system as well as employees’ responsibilities regarding the system.

Please evaluate Accounting, Inc.’s communication plan. Specifically, does

it answer all of the questions that a good communication plan should answer?
Which questions are left unanswered? How would you provide answers to the
unanswered questions (if any)?

Source: Adapted from P. Brotherton, “Meyners Pays for Performance: Changing

a Compensation System Is a Sensitive Undertaking; Here’s How One Firm
Handled It,” Journal of Accountancy, 196(2003): 41–46.