PDF | Book Review | ResearchGate, the professional network for scientists. page of the text, and compare this to the version number of the latest PDF version of the text ed., , Prentice Hall), the author of Regression Analysis for Categorical The rights of Dr. Herman Aguinis to be identified as Author of this Work has been . Case Study Evaluation of Performance Management System at. This edition includes a total of forty-three new case studies. In addition, the Performance Management (Third Edition): Herman Aguinis Edition: 3rd edition.
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Performance management / Herman Aguinis. — 3rd ed. p. cm. Chapter 1 Performance Management and Reward Systems in Context 1. Third Edition. Performance Management Herman Aguinis Kelley School of Business Indiana University. Boston Columbus Indianapolis New York San Francisco. Performance Management, 3rd edition Herman Aguinis at George Washington University · Herman A preview of the PDF is not available.
Journal of Prentice Hall. Column 1. Mediating and moderating roles of work These negative consequences affect all the parties involved:
Bridging micro and macro domains. As a second illustration. This is consistent with a general movement toward multidis- ciplinary and integrative research in the field of management.. This material will be useful in terms of understanding the multidimensional nature of performance and how different performance dimensions may be valued differently in different organizations.
This material will be useful in terms of learning how to document the relative effectiveness. This new material will be useful in providing guidelines on the most effective sequence of implementation of the various strategic planning steps as it cascades down and across the various organizational units.
Preface and Introduction xi whether it is better to use 5-point versus 7-point scales. This material will be useful in terms of providing guidelines on how to gather valid job analysis information. This new material will be useful in terms of understanding how the FFI is a process that leads to uncovering the contextual and per- sonal conditions that lead to success regarding both achievement and job satisfaction.
This material will be useful in terms of understanding that although performance management systems may have similar goals. Journal of Organizational Behavior. This material will be useful in terms of learning how to make the most of this information. This new information will be useful in terms 7 Aguinis. As illustrations. This material will be useful regarding the development of measures to assess performance more accurately. Enhancing the relevance of organizational behavior by embracing performance management research.
In addition to the aforementioned changes that permeate the entire book. This material will be useful in terms of providing information on what to do when performance problems are identified but employees are unable or unwilling to address them effectively. Raising constructive challenges with the goal to improve rather than merely criticize. Chapter 2 describes the performance management process starting with what should be done before a system is implemented and ending with the performance renewal and recontracting phases.
Chapter 1 discusses the advantages of implementing a successful performance management system as well as the negative outcomes associated with deficient systems. This discussion is sufficiently general yet detailed enough so that all managers. This chapter also includes what can be described as the features of an ideal system.
Part II. Chapters 4 and 5 describe some of the technical aspects associated with the assessment of performance and how to identify and measure both behaviors and results.
Chapter 6 discusses appraisal forms and various types of rating schemes. This material will be useful in terms of providing a deeper understanding of specific interventions aimed at improving team learning and performance.
Perry A. Debra Lammers. Part III. Robyn A. Alan Cabelly. Your coaching and feedback certainly helped me improve my performance! Herman Aguinis Bloomington.
Chapter 8 includes a description of employee developmental plans and the advantages of using degree systems for developmental purposes. Ryan K. I hope this additional material will allow students to have an enjoyable and productive learning experience that will enhance your own individual human capital. University of Johannesburg South Africa. Part IV. Chapter 9 addresses the skills needed by supervisors to observe and assess performance as well as those needed to provide constructive feedback.
University of Salamanca Spain. I am indebted to Graeme Martin for encouraging me to start this project. Bonnie Davis. Chapter 7 describes the steps involved in implementing a performance management system. Chapter 10 includes a discussion of traditional and contingent pay plans.
I thank each of you for your time and intellectual investment in this project. Christine Henle allowed me to use her extremely useful lecture notes. Harry Joo. Barbara Stephens helped me update many of these examples in the second edition. These materials will allow instructors to prepare for teaching this course more quickly and help make teaching this course a more enjoyable and interactive experience.
Teaching and giving lectures and workshops on perform- ance management at the Instituto de Empresa Madrid. These fac- ulty resources can be downloaded by visiting www.
Preface and Introduction xiii advantages and disadvantages of using various sources of performance information e. Chapter 11 addresses the timely topic of how to design and implement performance management systems dealing with team performance.
Barbara Stephens. In addi- tion. His teaching. He has delivered more than presentations at professional conferences and more than 90 invited presentations at universi- ties in more than 20 countries around the world.
Professor of Organizational Behavior and Human Resources. Academy of Management Review. Aguinis is a Fellow of the American Psychological Association. Personnel Psychology. South Africa.
Organizational Behavior and Human Decision Processes. Puerto Rico. Program Chair for the Iberoamerican Academy of Management. For more information. Distinguish among the various types of employee rewards. Describe the multiple purposes of a performance management system including strategic. Understand the concept of a reward system and its relationship to a performance management system.
PART I: Describe and explain the key features of an ideal performance management system. Distinguish performance management from performance appraisal. Explain the many advantages and make a business case for implementing a well-designed performance management system. These negative consequences affect all the parties involved: Recognize the multiple negative consequences that can arise from the poor design and implementation of a performance management system.
Explain the concept of performance management PM. Performance management is a continuous process of identifying. These are lean times in her organization. She is overwhelmed with end-of-the-year tasks. She has less than three days to turn in her forms. The fiscal year will end in one week. What a waste of my time! Sally believes the employees will be happy with their ratings and she will not have to deal with complaints or follow-up meetings.
She does not see her subordinates in action because they are in the field visiting customers most of the time. All that she knows about their performance is based on sales figures. In this way. Performance management is ongoing. What will she do? She decides to follow the path of least resistance: She receives a phone call from the human resources HR department: Describe and explain contextual and cultural factors that affect the implementation of performance management systems around the world.
It involves a neverending process of setting goals and objectives. Create a presentation providing persuasive arguments in support of the reasons that an organization should implement a performance management system. Sally is a sales manager at a large pharmaceutical company. Note the relationships and links between a performance management system and other human resources functions. Continuous process. At Siemens. Merrill Lynch started the transition from giving employees one per- formance appraisal per year to focusing on one of the important principles of performance management: A system that involves employee evaluations once a year without an ongoing effort to provide feedback and coaching so that performance can be improved is not a true performance management system.
Mid-year reviews assess what progress has been made toward the goals and how personal development plans are faring. Alignment with strategic goals. As an investment bank. In sharp contrast to its old performance appraisal system. Every manager understands that performance is a critical aspect of working at Siemens. Managers also get extensive training on how to set objectives and conduct reviews.
In January. The importance of knowing your employees is highlighted by the fact that the Management Standards Centre. Based on these results. Unit D2. Self-esteem is increased. Managers gain insight about subordinates. This is why a recent survey of almost 1. For now. Direct supervisors and other managers in charge of the appraisal gain new insights into the person being appraised.
Motivation to perform is increased. The goals of the unit and the organization are made clear. This is particularly important given the aging working population in the United States. Performance management systems provide valid information about performance that can be used for adminis- trative actions such as merit increases. Although some individuals are more likely to engage in misconduct compared to others based on individual differences in personality and other attributes.
The participants in the system are likely to develop a better understanding of themselves and of the kind of development activities that are of value to them as they progress through the organization. Employees also gain a better understanding of what it takes to be a successful performer i..
Employee misconduct is minimized. There is better protection from lawsuits. An obvious contribution is that employee performance is improved. When performance management systems are not in place. The job of the person being appraised may be clarified and defined more clearly. Self-insight and development are enhanced. In turn. Employees become more competent. Performance management systems can help improve employee acceptance of these wider goals i.
Data collected through performance management systems can help document compliance with regulations e. This is a contribution to the communication of what the unit and the organization are all about and how organizational goals cascade down to the unit and the individual employee. In general. Participants in the system also gain a better understanding of their particular strengths and weaknesses that can help them better define future career paths.
This can be useful for direct supervisors as well as for supervisors once removed. Organizational goals are made clear. The definitions of job and criteria are clarified.
Such misconduct includes accounting irregularities. Administrative actions are more fair and appropriate. Once this new organizational direction is established. Performance management systems allow for a quicker identification of good and poor performers.
Organizational change is facilitated. This is precisely what IBM did in the s when it wanted to switch focus to customer satisfaction: When managers possess these competencies. Employees are pro- vided training in the necessary skills and are rewarded for improved perform- ance so that they have both the knowledge and motivation to improve product quality and customer service.
There is better and more timely differentiation between good and poor performers. Performance management systems allow managers to communicate to their subordinates their judgments regarding performance.
Both assessing and monitoring the performance of others are listed as key competencies for managers by the Management Standards Centre www. Units B3. Performance management systems can be a useful tool to drive organizational change. It can be guided and influenced by policies. In terms of turnover intentions. The only way to change the culture is to change the way individuals perform on a daily basis.
In short. A good performance management system leads to enhanced employee engagement. Employee engagement is an important predictor of organizational performance and success and. Which of the contributions included in Table 1. Is their self-esteem increased? As an illustration of this point. Voice behavior is encouraged. A well-implemented performance management system allows employees to engage in voice behavior that can lead to improved organizational processes.
Voice behavior involves making suggestions for changes and improvements that are innovative. Employees who are engaged feel involved. Employee engagement is enhanced. What are some of the negative consequences associated with low-quality and poorly implemented systems? Consider the following list: Increased turnover. Motivation may be lowered for many reasons. Lowered self-esteem. They can leave physically i. If a standardized system is not in place..
As a consequence of a deficient system. Performance management systems cost money and quite a bit of time. Decreased motivation to perform. These resources are wasted when systems are poorly designed and implemented.
Use of misleading information. If the process is not seen as fair. Damaged relationships. Self-esteem may be lowered if feedback is provided in an inappropriate and inaccurate way. Wasted time and money. As a con- sequence.
Increased risk of litigation. Varying and unfair standards and ratings. How about the risk of litigation? How about the time and money invested in collecting. Because of poor communication. Table 1. Such systems will be resisted because of competing obligations and allocation of resources e.
When the performance assessment instrument is not seen as valid and the system is not perceived as fair. Expensive lawsuits may be filed by individuals who feel they have been appraised unfairly. Personal values. What is sometimes worse. Once again. Both standards and individual ratings may vary across and within units and be unfair. What are some of the consequences of the system implemented by her company?
Unclear ratings system.
Employee burnout and job dissatisfaction. Poorly imple- mented systems do not provide the benefits provided by well-implemented systems. Emerging biases. When she won her sex-discrimination lawsuit. Where does the system fit best? Is the system more closely aligned with some of the positive consequences listed in Table 1.
The various types of returns are defined next. This is the case because not all types of returns are allocated based on performance. A reward system is the set of mechanisms for distributing both tangible and intangible returns as part of an employ- ment relationship. She stated in her lawsuit that once she was promoted and reported to the new manager.
A female employee was promoted several times and succeeded in the construction industry until she started working under the supervision of a new manager. After eight months of receiving no feedback from her manager. Chapter 10 provides a detailed discussion of how a performance management system is used to allocate rewards.
It should be noted that not all types of returns are directly related to performance management systems. Take a look at Tables 1. For many employees. The base pay. In some countries e. Chapter 10 describes the topic of contingent pay in detail. A second difference between incentives and contingent pay is that incentives are known in advance. Incentives are one-time payments and are sometimes referred to as variable pay. In a nutshell. United States.
Salary is base cash compensation received by employees who are exempt from regulations of the Fair Labor Standards Act and. A survey administered in late to 25 state and In Both short-term and long-term incentives are quite popular. Contingent pay. Employees in most professional and managerial jobs also called salaried employees are exempt employees.
By contrast. If this value is not reached. And there is yet another restriction: Delta Petroleum. The goals of the program are to provide better disease control for the patient and to cut down on expensive future treatments. In the United States. The program requires doctors to work closely with patients and focus on preventative medicine. Some countries mandate income protection programs by law.
Doctors in the program receive the additional pay as an incentive without an increase to base salary. Additional savings are expected through reduced medical claims and health insurance premiums paid by employers. In the meantime. Canadian organizations pay into a fund that provides income protection in the case of a disability. In summary. Physical indicators. SunU encapsulates a mix of traditional. Sun believes in a work hard—play hard attitude. This benefit i. Sun Microsystems actively promotes an equal balance between work and home life and closes its Broomfield.
Sun Microsystems allows employees to enroll in SunU. Other allowances can include smart phones and their monthly charges. These kinds of allowances are typical for expatriate personnel and are popular for high-level managers throughout the world. These are optional benefits provided by organizations. These include time away from work e. They include recognition and status. Other types of benefits under the income protection rubric include medical insurance.
In South Africa. The new knowledge and skills acquired by employees can help them not only to further their careers within Sun but also to take this knowledge with them if they seek employment elsewhere. Think about the performance management system of your current employer. As an example of the low end of the dependency continuum. Based on Table 1. Long-term incentives e.
Between the high and low end. On the other end. Aylwin B. Executive management has identified employees who are considered potential leaders and given training and development opportunities specifically aimed at cultural and strategic changes.
Sears Holdings Corporation is the third largest broad-line retailer in the United States. In sum. Sears Holdings is the leading home appliance retailer as well as a leader in tools. Performance management serves as a catalyst for onboarding because it allows new BOX 1. Following the merger with Kmart Corp.
A second strategic purpose of performance management systems is that they play an important role in the onboarding process. A second key objective is to bring about an entrepreneurial spirit where store managers strive for financial literacy and are challenged to identify opportunities for greater profits.
Headquartered in Hoffman Estates. Several aspects of the performance management system are being utilized to achieve these strategic objectives. All Sears headquarters employees are also required to spend a day working in a store.
Lewis was promoted to chief executive and tasked with a strategic culture change initiative in hopes of reinvigorating the struggling retail company. A strategic objective is to move from an inward focus to a customer service approach. Lewis spends three days per week in stores with employees and frequently quizzes managers on their knowledge. Such administrative decisions include salary adjustments. This feedback allows for the identification of strengths and weak- nesses as well as the causes for performance deficiencies which could be due to individual.
This feedback can be used in a developmental man- ner. Feedback is useful only when employees are willing to receive it. Of course. Workforce planning comprises a set of systems that allows organizations to anticipate and respond to needs emerging within and outside the organization. Managers can use feedback to coach employees and improve performance on an ongoing basis. Other organizational maintenance purposes served by performance management systems include assessing future training needs.
This gives the employees a clear sense of areas in which they need improvement and provides documentation if disciplinary action is needed. Being members of the credit union. This improved the way in which the system is used for allocating rewards and therefore serves an administrative purpose. These activities cannot be conducted effectively in the absence of a good performance management system. SELCO scrapped an old performance appraisal system and replaced it with a new multipurpose and more effective performance management system.
Performance management systems are the primary means through which accurate talent invento- ries can be assembled. Several companies implement performance management systems that allow them to accomplish the multiple objectives described earlier. For an example of one such company. SELCO offers many of the same services offered by other banks. This information can be especially useful in the case of litigation. If scores on the test and on the performance meas- ure are correlated.
This alignment serves both strategic and informational purposes. This component serves both informational and docu- mentational purposes. Scores on the test can then be paired with scores collected through the performance management system.
This serves a developmental purpose. But what does a good system look like? The following characteristics are likely to allow a performance management system to be successful. To help top management achieve strategic business objectives Administrative: To furnish valid and useful information for making administrative decisions about employees Informational: To allow managers to provide coaching to their employees Organizational maintenance: To provide information to be used in workplace planning and allocation of human resources Documentational: To collect useful information that can be used for various purposes e..
The reality is that performance management systems are seldom implemented in an ideal way. Practical constraints may not allow for the implementation of all these fea- tures. Although multiple purposes are possible.. Which of these purposes are being served by the system you are considering? Regarding broader cultural issues.
The importance of context in implementing highly effective performance manage- ment systems is emphasized throughout the book. In such organizations. The system should be thorough regarding four dimensions.
Systems that are too expensive. This relation- ship was weaker in former East German companies. Results showed that in former West German companies. That is. A good system should be specific: Because one formal evaluation per year is usually not sufficient.. People will not pay attention to a system that has no consequences in terms of outcomes that they value.
The measures of performance should also be valid. The performance man- agement system should provide information that allows for the identification of effective and ineffective performance.
These are clearly relevant dimensions. A good system should include measures of performance that are consistent and free of error. In terms of decision making.. In this context. Among other relevant performance dimensions. The system must be meaningful in several ways. Because a good system is inherently discrimina- tory. Korea cultures. Do they feel that supervisors are empathic and helpful? United States to more collectivistic e. Good systems include input from multiple sources on an ongoing basis.
For ex- ample. Perceptions of fairness are subjective and the only way to know if a system is seen as fair is to ask the participants about the system. Such inclusive systems are likely to lead to more successful systems including less employee resistance. For exam- ple. A good system is acceptable and is perceived as fair by all participants.. Such percep- tions include four distinct components.
Think about the performance management system implemented in your organization or the last organization for which you worked. How far is your system from the ideal? TABLE 1. As noted earlier. Good systems have no secrets. This means that performance is evaluated consistently across people and time.
When employees perceive an error has been made. Establishing an appeals process. This means that the su- pervisor suppresses her personal self-interest in providing evaluations. The process of assigning ratings should minimize subjective aspects. Which of the features listed in Table 1. Good systems comply with ethical standards.
To achieve this goal. In the absence of a good performance management system. For example.. A study conducted for Mercer. The beneficial link between performance management and training became evi- denced recently in the Korean operations. Development plans provide informa- tion on what skills will be acquired in the near future.
Performance management provides informa- tion on developmental needs for employees. One organization that is able to link its performance management system to training initiatives is Kimberly-Clark. This system makes a clear link between perform- ance and training.
This information is also used in making recruitment and hiring decisions. In spite of this unique feature.
Performance management is gaining increased stature and significance given the more recent emphasis on talent management and total rewards manage- ment. As a preview and to highlight the increasing importance of performance management globally. Implementing a successful performance management system is a requirement for the successful implementation of other HR functions. Performance management in the United Kingdom has been affected by several factors. Performance management in Germany has been affected by the established practice of long-term employment relation- ships.
Performance management in the United Kingdom is an established organizational practice and is clearly influenced by broader societal issues such as socioeconomic. Performance management has become increasingly popular since the s. Performance management in France faces unique contextual issues such as legal requirements to invest in employee training and development and the need to emphasize individual accountability.
Compensation and reward decisions are likely to be arbitrary in the absence of a good performance management system. It allows for assessing the current talent and making predictions about future needs both at the individual and organizational levels. For the most part. We will discuss examples of how systems are implemented in different countries. Negotiations began in Performance management in Turkey is evolving rapidly given its official candidacy for European Union membership.
The intense international business activity is leading to a change in traditional values. The current challenge is how to reconcile a merit-based approach with more traditional cultural values.
More recently. From the founding of the socialist state in until the s. In general performance management systems in Japan tend to empha- size behaviors to the detriment of results this distinction is discussed in detail in Chapter 4.
The Australian economy has made an important shift from manufacturing to service.. Work relationships in South Korea are hierarchical in nature and emphasize the importance of groups over individuals. Performance management is a fairly novel issue in Turkey. Because personal relation- ships play an important role in Turkish culture. Important issues to consider for successful implementation of performance management systems in China include respect for age and senior- ity and the emphasis on social harmony.
Although Japanese firms relied on lifetime employment and seniority as key organizational practices. Performance improve employee engagement. From the perspective of suits and wasted time and resources. Although there is a common challenge to align individual and organizational goals and enhance the performance of individuals and groups.
In employees. This brief overview provides us with some information regarding performance management systems around the world. From the nisms for determining and distributing. Not all types of unit.. Intangible returns.. Such ideal systems are recognition and status.. Discuss the recent job. How many of the 14 characteristics of an ideal system performance management system as discussed in this chap. In some cases. Identify the characteristic in your system that is furthest may be present to a matter of degree and may require that you from the ideal.
When implemented well. Discuss the implications of the presence of this each of the features is present Y: Think about a performance management system you know. As should be evident by now.
What can be done to produce a better include some additional information in the Comments column. Ideal versus Actual Performance Management System The table here summarizes the key characteristics of an ideal 1.
Identify two characteristics that are not present at This could be the one implemented at your current or most all. Identify one characteristic that is clearly present in your zation. The process starts performance management systems pro. Who Next. It is acceptable to those who use it for decisions.
The system is congruent with norms based on the culture of the region and country where the organization is located. Practicality It is readily available for use. Results are used for important administrative decisions. Thoroughness All employees are evaluated. Only the functions that are under the control of the employee are measured. Standards and evaluations for each job function are important and relevant. Identification of The system distinguishes between effective effective and and ineffective behaviors and results.
Reliability Measures of performance are consistent. System provides for continuing skill development of evaluators. Feedback is provided on both positive and negative performance.
Measures do not leave out any important performance facets. All major job responsibilities are evaluated. It is easy to use.
Measures do not include factors outside employee control. Specificity Detailed guidance is provided to employees about what is expected of them and how they can meet these expectations. Benefits of the system outweigh the costs. Measures of performance are free of error. Validity Measures include all critical performance facets. Meaningfulness Evaluations take place at regular intervals and at appropriate moments.
Evaluations include performance spanning the entire review period. Inclusiveness Employee input about their performance is gathered from the employees before the appraisal meeting. Employee privacy is respected. Communications are factual. Openness Performance is evaluated frequently and feedback is provided on an ongoing basis. Employees perceive the way they are treated in the course of designing and implementing the system as fair interpersonal justice. Employees perceive the procedures used to determine the ratings and subsequent rewards as fair procedural justice.
Ethicality Supervisors suppress their personal self-interest in providing evaluations. Appraisal meeting is a two-way communication process and not one-way communication delivered from the supervisor to the employee.
Standards are clear and communicated on an ongoing basis. Employees participate in the process of creating the system by providing input on how performance should be measured. Supervisors evaluate performance dimensions only for which they have sufficient information. Standardization Performance is evaluated consistently across people and time.
Employees perceive the information and explanations they receive as part of the performance management system as fair informational justice. Correctability There is an appeals process.
Network Solutions wanted to improve its ability to performance management cycle consisted of the following meet its organizational goals and realized that one way of process: In addition to the The first task for the design team was to build a business case training available on the intranet. Development planning announced that he wanted to implement a forced distribution 4. Managers bar on performance management at Network Solutions by are responsible for scheduling meetings. Performance planning Given this situation.
Initially the program was rolled out as a development planning phase of the system is the joint year- year-round people management system that would raise the round responsibility of managers and employees. With forced distribution systems. Ongoing discussions and updates between managers performance management system in which a set percentage and employees of employees were classified in each of several categories 5.
Annual performance summary e. Network Solutions and by encouraging all senior leaders to software. Both managers and employees formance level of all employees. Until ensure that those reporting directly to them understood the recently. Network Solutions. Individual contributors are responsible for documenting desired outcomes of the new system included raising the per. The plans. The Network Solutions global Finally. Network Solutions also wanted the performance meeting.
If performance does not improve. To start with. To do this. HR Centers of Expertise of Network 4. The company Network Solutions?
Its general conclusion—there was a human tendency to favor employees who are like the Criticism 1: Based on the description of the system at Network receive a rating of 1. It questions. There is also a plan to monitor for and correct well as by a comparison rating of others at a similar level at any unproductive practices and implement correcting policies Network Solutions.
Use Xs on the table below to denote Criticism 4: Individuals described in the chapter as ideal characteristics? Which receiving the highest rating of 1 receive the highest salary of the ideal characteristics are missing?
For which of the increases. Network Solutions plans to con. Individuals with a rating of 2 receive average to high Network Solutions that correspond to the features salary increases. If their performance does improve. Which of the should take the form of a dialogue between the supervi- following criticisms pertain to performance appraisal systems sor and subordinate. Employees receiving a 3. Network Solutions plans on continued rating. Based on the description of the system at Network Solutions continue to educate employees about the system to Solutions.
Equal answers. When they triage workplace demands.
As a result. If your appraisals end up at the bottom.
Which criti. What are the features of the system implemented at age. How does that help system and a performance management system? After answering these Criticism 3: Keith H.
Available online at http: Bloomberg Businessweek. August 1. Fast Company. When done uniquely unsuited for that. Retrieval date: March 3.
Endnotes 1. The New. Why we hate HR. Incorporation of International Issues. In contrast to many other texts on the market, which include a separate chapter on international issues, this text integrates international issues throughout the material.
Performance Management Process Chapter 3: Measuring Results and Behaviors Chapter 6: Gathering Performance Information Chapter 7: Performance Management and Employee Development Chapter 9: Bookseller Inventory Ask Seller a Question. Bibliographic Details Title: Performance Management Third Edition Publisher: Pearson Education Publication Date: Softcover Book Condition: New Edition: About this title Synopsis: All books are new.
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