What is performance management?

It is a continuous process of identifying, measuring, and developing the performance of individuals and teams while aligning performance with the strategic goals of the organization.

Poor performance management can lead to disengagement, dissatisfaction, and turnover, perception of inequity, damage to relationships.

Performance appraisals used to be scheduled once a year, but many companies are now transitioning towards more frequent feedback systems.
Regardless the frequency, you, as a leader, need to start a text file on all your direct reports at the beginning of the year and write down their key behaviors and outcomes following the completion of major tasks and projects.

A five-point scale could be sufficient to capture variations in behaviors and outcomes.
But how to assign ratings to your employee?
You can use an absolute rating system (evaluation of one employee independently without comparing him to his colleagues), or you can choose a comparative rating system (every employee is compared to his peers).

The most typical form of a comparative rating system is a force distribution, or force performance curve.

A curve could require that no more than 20% of employee are assigned to exceeding expectations, the top bracket. 70% are assigned to the middle bracket, meeting expectations, and 10% are assigned to the lowest bracket, not meeting expectations.

Forced distributions was really popular in the 80s, 90s, and early 2000s but the enthusiasm drop significantly in recent years.
One of the key findings in recent studies was that groups working under forced performance distribution registered, on average, 8% percent productivity gains. But for those employees that were switching to forced distribution, initial increase in performance was followed by a sharp decline in performance. Forced distributions can result in perceptions of inequity and low morale: “I’d love to give you five but I have to give you four because of the curve. “.

Another variant of a comparative rating system is a forced peer ranking, where a manager rank orders his or her subordinates from the best to the worst.
Studies discovered that there are two ways to get to the top: one is to improve your own performance, and the other is to drag others down. And the resulting behaviors can range from reduced collaboration, to outright sabotage.

360 DEGREE FEEDBACK

360 degree feedback is systematic feedback on your performance, behaviors, skills, and competencies collected from you and a number of different types of stakeholders who interact with you at workplace.

tThe key purposes and the motivations behind 360s is that it offers new, diverse perspectives on one’s skills, behaviors, and performance.
360s offer feedback that might not be typically shared, and so it’s critical to protect confidentiality of respondents, of raters.

45% of 360 degree feedback is unexpected and, hence, particularly valuable.

The best use you can do of 360 degree feedback is for developmental purposes, it is not a good idea to use it for performance appraisals.

Some of the key challenges of 360s are:

  • Inexperienced raters;
  • Raters not held accountable for the quality of their ratings;
  • Raters can miscode (or misunderstand) the scale or the target of evaluation.

Some of the best practices to use 360’s are:

  • Misured skills and competencies have to be in line with the vision and strategy of the organization and your team;
  • Collect feedback continuously (not once a year);
  • Carefully select and validate select scales;
  • Use a large groups of raters.

Research documents some significant positive effects of using 360s. They contribute to improvement in how we see ourselves and how others see us.
Another benefit of 360s is that managers develop more positive attitudes towards upward feedback and are less concerned that such feedback may undermine their authority.

RATER ERRORS

AVAILABILITY ERROR: We tend to emphasize information that is readily available, recently exposed, vivid. So in assigning ratings, we emphasize most recent meeting, interactions, projects, and assignments.

LENIENCY ERROR: Some raters have a tendency to inflate ratings to be liked, to avoid delivering bad news.

CENTRAL TENDENCY ERROR: We tend to rely on the middle range of the scale and avoid extremes.

ATTRIBUTION ERROR: We tend to attribute employee’s poor performance to his/her internal characteristics.

SAMPLE SIZE ERROR: Small sample sizes can lead us to errors on the side of the extremes, large sample sizes enable us to get closer to the “true” mean.

HALO ERROR: We fail to distinguish between different dimensions of performance to be evaluated and we can be lead to rate based on the overall impression of an employee and not just a specific dimension/skill.

Notes from: Leading People and Teams Specialization