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CHAPTER 5: PERFORMANCE MANAGEMENT

In this chapter, we present the foundation for the measurement of job-related performance, and

we discuss measures of job performance that may be used as criteria in evaluating employees.

Learning Outcomes

After reading this chapter you should be able to

Describe the importance of developing and using scientifically sound measures of job

performance in evaluating employees

Understand the relationship between individual performance measures, criteria, and

performance dimensions related to a job

Appreciate the importance of measuring job performance

Discuss the strengths and weaknesses of different types of performance rating systems

Define the characteristics that a performance appraisal system should have in place to

satisfy human rights and legal concerns

Chapter Summary

One useful approach to understanding job performance is to recognize that job performance is a

multidimensional construct composed of task, contextual, and counterproductive behaviours.

Understanding the factors that underlie job performance is necessary to its measurement. The

usefulness of any personnel selection system is determined by how well it predicts job

performance as measured by job-related criteria. Any criteria chosen as a measure of job

performance must be valid, reliable, practical, and capable of withstanding legal challenge. Once

job-related performance dimensions or competencies have been identified, the type of criterion

measure that most validly represents each performance dimension or competency should be

selected. Multiple data can always be combined into a composite measure where the different

components are weighted according to their importance.

Current research suggests that training criteria are acceptable performance measures for

estimating maximum performance. However, to obtain a better understanding of possible

changes in validities over time, repeated measures of performance should be taken over time.

Data from the various criterion measures should be collected in an un-collapsed form and formed

into composites when necessary.

The weighting of composites should reflect the priority assigned by the organization to

the different goal-related behaviours. All procedures used in establishing the performance

dimensions or competencies, their measures, and data collection and analysis, should be

documented.

There are many ways to measure performance, and these fall into two main groups:

objective and subjective measures. Objective measures are constrained by other employee and

organizational constraints, but some types may serve as indicators of counterproductive

behaviour. Subjective measures, mostly performance appraisals carried out by employee

supervisors, are the predominant method of evaluation. There are many different types of

performance appraisal/rating systems. All rating systems are subject to rating errors; however,

these errors can be reduced through appropriate training of the raters. BARS and BOS methods

appear to produce better rater and ratee satisfaction. The perceived fairness of an appraisal

system is the key to its acceptance as well as its legal defensibility.

38 Copyright © 2011 Nelson Education Ltd.Performance appraisal systems, if properly developed, will provide data that are as

reliable as systems based on objective measures. Recently, 360-degree feedback systems that

acquire performance information from an employee’s peers, subordinates, supervisors, and

clients have become very popular. Peers are more likely to attend to contextual performance than

to task performance. Supervisors are more likely to focus on task behaviour.

Although performance appraisals may be problematic, most organizations will continue

to use them to assess employee job behaviours. More consideration is being given to

performance measurement that is not based on performance ratings but on direct observation of

the employee in actual or simulated work environments. Performance appraisals must be used to

integrate and align individual and organizational objectives.

Discussion Topics & Learning Activities

1. Have you ever gone through a performance appraisal in a job? Think about your experience:

How was the appraisal performed? If you were given a chance to do your own appraisal,

what type of system would you want to use? What type of performance data do you think

should be compiled? Who should provide such information?

2. Typically, “job performance” is made up of a lot of different behaviours in our jobs. How can

managers best measure and manage employee performance? Check out the web for examples

of measuring and managing job performance.

Copyright © 2011 Nelson Education Ltd. 39Chapter 5—Performance Management

MULTIPLE CHOICE

1. Athena tends to assign an applicant the same rating across different job dimensions, regardless

of actual performance. She may be accused of making what type of error?

a. halo

b. leniency

c. severity

d. central tendency

ANS: A PTS: 1 BLM: Higher Order REF: 167

2. Raters who tend to assign an applicant an average rating across different job dimensions,

regardless of actual performance, may be suspected of making what type of error?

a. halo

b. leniency

c. severity

d. central tendency

ANS: D PTS: 1 BLM: Remember REF: 167

3. Which of the following is a strength of Behaviourally Anchored Rating Scales (BARS)?

a. b. c. d. BARS integrate job analytic information directly into the performance appraisal

measure.

BARS incorporate a frequency rating scale for each behaviour to identify the

specific rate of incidence.

Raters are able to create their own anchors to ensure flexibility in ratings.

BARS are simple and inexpensive to develop.

ANS: A PTS: 1 BLM: Higher Order REF: 163–165

40 Copyright © 2011 Nelson Education Ltd.4. 5. 6. According to your text, what can we conclude about behavioural observation scales (BOS)?

a. b. c. d. They do not involve any analysis of critical incidents.

They take more time and money to develop than do BARS.

They use a standardized rating scale created by detailed explanations of what

behaviours are required for each rating level.

The development of BOS requires the participation of the supervisors and workers.

ANS: D PTS: 1 BLM: Remember REF: 164

A performance appraisal technique in which employees are assessed on their performance in a

“fake” setting (which tries to duplicate a real situation) is known as which of the following?

a. job knowledge test

b. 360-degree feedback test

c. simulation

d. multi-source assessment

ANS: C PTS: 1 BLM: Remember REF: 175

Shelley is in charge of hiring employees for new positions in the health care field. A team of HR

specialists will review all applications, conduct interviews, and administer the selection tests.

She wants to ensure high rater accuracy in selecting new employees, and she ensures that all of

them have the same understanding of the rating system’s instructions, and the same interpretation

of the performance dimensions. She is using what type of process?

a. frame of reference training

b. performance domain definition

c. rater accountability

d. 360 degree ratings

ANS: A PTS: 1 BLM: Higher Order REF: 169

Copyright © 2011 Nelson Education Ltd. 417. According to the text, what do we know about peer ratings?

a. b. c. d. Peer feedback is one of the best predictors of job performance.

Most organizations involve coworkers in the assessment process.

Peer evaluations are unrelated to work-group tensions and group performance.

Peer ratings tend to exclude information about contextual performance.

ANS: A PTS: 1 BLM: Remember REF: 170

8. Brad is implementing a new 360-degree performance feedback rating system. In which situation

would this feedback be most ideal?

a. Brad’s organization is a very hierarchical “command and control” environment.

b. Brad is concerned about the disadvantages of using peer ratings.

c. Brad wants to provide employees with feedback for development and training

purposes.

d. Brad is looking for an alternative to supervisor ratings.

ANS: C PTS: 1 BLM: Higher Order REF: 172-173

9. Arlene is using a balanced scorecard method for her business. Through what perspectives does

this method assess performance?

a. supervisor, peer, client, self

b. customer, financial, internal business processes, and learning and growth

c. internal; external client & customer organizational, and societal

d. job (task), fiscal, and interpersonal performance

ANS: B PTS: 1 BLM: Higher Order REF: 173

10. In addition to supervisor ratings, Jack wants to include measures such as absenteeism, number of

customer complaints, and rate of sales growth. What are these measures known as?

a. individual rating-system measures of job performance

b. subjective measures of job performance

c. 360-degree measures of performance

d. objective measures of job performance

ANS: D PTS: 1 BLM: Higher Order REF: 158

42 Copyright © 2011 Nelson Education Ltd.11. Which of the following best defines voluntary behaviours that violate significant organizational

norms, jeopardizing the well-being of the organization and the employees?

a. organizational citizenship behaviours

b. counterproductive behaviours

c. contextual performance

d. typical performance

ANS: B PTS: 1 BLM: Remember REF: 151

12. When does typical performance usually occur with employees?

a. when they are aware that they are being evaluated

b. when they are involved in a short-term, evaluative training session

c. when they experience high motivation at their jobs

d. when they are assessed over an extended period of time

ANS: D PTS: 1 BLM: Higher Order REF: 156

13. Alyssa knows that her performance evaluation is coming up shortly, and her performance is

being monitored, so she is motivated to work hard and perform to her best. Which of the

following best describes this performance?

a. her maximal performance

b. her contextual performance

c. her typical performance

d. her task performance

ANS: A PTS: 1 BLM: Higher Order REF: 156

Copyright © 2011 Nelson Education Ltd. 4314. Sam is trying to assess the sales performance of sales people. He inadvertently assesses the

extent to which the sales people have good organizational citizenship behaviours (attend

meetings, attend staff functions, etc.). What is the measurement of aspects not related to job

performance known as?

a. criterion deficiency

b. criterion relevance

c. criterion contamination

d. criterion reliability

ANS: C PTS: 1 BLM: Higher Order REF: 152–153

15. Stephanie has developed a performance measure of administrative assistants in a large

manufacturing organization. The measure includes the assistants’ performance in their key job

tasks (i.e., typing, filing, and scheduling). Unfortunately, she didn’t include any measurement of

their performance in dealing with clients, which is a major part of their job. What is this

oversight in her performance measure called?

a. criterion deficiency

b. criterion relevance

c. criterion contamination

d. criterion reliability

ANS: A PTS: 1 BLM: Higher Order REF: 152–153

16. Which of the following defines the degree to which a criterion measure is available, plausible,

and acceptable to organizational decision makers?

a. criterion relevance

b. criterion practicality

c. criterion contamination

d. criterion reliability

ANS: B PTS: 1 BLM: Remember REF: 154

44 Copyright © 2011 Nelson Education Ltd.TRUE/FALSE

1. Halo rating errors involve assigning applicants with average ratings across different job

dimensions, regardless of their actual performance.

ANS: F PTS: 1 REF: 167

2. Behaviourally anchored rating scales use job behaviours derived through a critical incident job

analysis to anchor values on a rating scale.

ANS: T PTS: 1 REF: 163

3. Peer evaluations are unrelated to work-group performance.

ANS: F PTS: 1 REF: 170

4. The balanced scorecard approach is a useful method for clarifying the multiple performance

dimensions of a job.

ANS: T PTS: 1 REF: 173

5. Simulations involve assessing workers’ performance in performing one or more job tasks in a

setting that resembles their real job setting and tasks.

ANS: T PTS: 1 REF: 175

6. Leniency errors are made when a rater assigns a lower rating to an employee, after rating the

previous employee very highly.

ANS: F PTS: 1 REF: 167

7. In reality, many ratings that appear to be “halo” are really a reflection of true high performance

in all areas.

ANS: T PTS: 1 REF: 168

8. Peer feedback is among the best predictors of job performance.

ANS: T PTS: 1 REF: 170

Copyright © 2011 Nelson Education Ltd. 459. Self-ratings of performance tend to have the least degree of agreement with ratings from other

sources.

ANS: T PTS: 1 REF: 171

10. Neither internal nor external customer ratings provide valid information on employee

performance.

ANS: F PTS: 1 REF: 171

11. Criterion relevancy is the degree to which the scores are free from random measurement errors.

ANS: F PTS: 1 REF: 152–153

SHORT ANSWER

1. Discuss the four relative rating systems discussed in this chapter.

REF: 160-161

2. Compare and contrast the BARS with the BOS.

REF: 163-166

3. You are preparing for your annual performance appraisal. You are a bit worried about the process,

because you know your supervisor uses an unstructured process, and she is sometimes prone to

biases. Recalling what you learned about rater biases, you think about how you can increase your

chances of getting a positive performance appraisal. List and define four of these biases and

explain how you can use them to your advantage.

REF: 166-168

4. Roz is the founder of the not-for-profit Shoppers Counselling Group (SCG). SCG is an

organization that runs programs and individual counselling sessions for shopaholics (people with

severe shopping addictions). She has a staff of 30 counsellors and administrative assistants, and

she needs to develop a system to assess the performance of her staff. She comes to you for advice

on the different rating systems. Explain to her the difference between relative and absolute rating

systems, and the specific types of systems that each entail.

REF: 160-166

46 Copyright © 2011 Nelson Education Ltd.