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

PART I:

Chapter 1
Chapter 2
Chapter 3
PART II:

Chapter 4
Chapter 5
Chapter 6
Chapter 7
PART III:

Chapter 8
Chapter 9
PART IV:

CONTENTS

STRATEGIC AND GENERAL CONSIDERATIONS

Performance Management and Reward Systems in Context

Performance Management Process 30
Performance Management and Strategic Planning 50
SYSTEM IMPLEMENTATION

77

Defining Performance and Choosing a Measurement

Approach 77
Measuring Results and Behaviors 94
Gathering Performance Information 118
Implementing a Performance Management System 153
EMPLOYEE DEVELOPMENT

179

Performances Management and Employee Development

Performance Management Skills 206

179

REWARD SYSTEMS, LEGAL ISSUES, AND TEAM

PERFORMANCE MANAGEMENT

Chapter 10 Reward Systems and Legal Issues 239

Chapter 11 Managing Team Performance 268

239

CONTENTS

Preface

xi

Acknowledgments

xvi

About the Author

xvi

PART I:

STRATEGIC AND GENERAL CONSIDERATIONS

CHAPTER 1 Performance Management and Reward Systems in Context

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
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
1.5.6 Documentational Purpose 16

>-

10

15

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.
CHAPTER 2 Performance Management Process
( 2.1 Prerequisites
31
2.2 Performance Planning
38

30

26

2.2.7 Results 38
2.2.2 Behaviors 39
2.2.3 Development Plan

Contents vio

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
CHAPTER 3 Performance Management and Strategic Planning
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
3.2.3 Job Descriptions 66
3.2.4 Individual and Team Performance 67

48

50

65

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
4.4.1 Trait Approach
84
4.4.2 Behavior Approach
85
4.4.3 Results Approach
87

83

Case Study 4-1 Diagnosing the Causes of Poor Performance

91
Case Study 4-2 Differentiating Task from Contextual Performance
Case Study 4-3 Choosing a Performance Measurement Approach
at Paychex, Inc.
92

91

viii

Contents

CHAPTER 5 Measuring Results and Behaviors

5.1 Measuring Results
95
5.7.7 Determining Accountabilities 95
5.1.2 Determining Objectives 97
5.1.3 Determining Performance Standards

94

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
7.1 Preparation: Communication, Appeals Process, Training
Programs, and Pilot Testing 154
7.2 Communication Plan 155

153

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.
Case Study 7-3 Evaluation of Performance Management System at
Accounting, Inc. 176
PART III:

EMPLOYEE DEVELOPMENT

175

179

CHAPTER 8 Performance Management and Employee Development

8.1 Personal Developmental Plans
180

179

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
8.3.3 Characteristics of a Good System 198

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

Contents
PART IV:

REWARD SYSTEMS, LEGAL ISSUES, AND TEAM

PERFORMANCE MANAGEMENT

CHAPTER 10 Reward Systems and Legal Issues

239

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

10.4 Selecting a Contingent Pay Plan
245
10.5 Putting Pay in Context
248

243

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
Name Index

288

Subject Index

290

Author Index

294

285