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Date: Friday, 18 October 2024, 12:14 PM

Industrial Psychology 1B
4.1. Notes [ ± 60 min ]

1. Learning outcomes

By the end of this lesson, you should be able to:

Understand the role of performance management in

organisational strategy.
Describe and critique objective measures of performance.
Understand multi-dimensional models of job performance.
Understand the difference between task performance and
organisational citizenship behaviour.
Describe competencies and their use in performance
management.
Describe and evaluate methods of performance appraisal.
Understand the importance of goal setting, feedback and
intervention in performance management.
Understand how goal setting and feedback can be made
more effective in performance management.
Describe coaching as a performance improvement
intervention.

Prescribed Reading
West, M.A., & Woods, S.A. (2019). The psychology of
work and organizations (3rd ed.). Cengage Learning.

ISBN: 9781473767171

Chapter 7, pg 217 - 254

2. Introduction

Human performance plays a crucial role in shaping the world around us, whether on a personal level or
within broader societal systems. It is through effective task execution that problems are solved and progress
is made. Organisations exist to harness collective performance, recognising that individual efforts alone are
often insufficient to meet complex challenges. Managing and understanding how individual contributions
combine to achieve shared goals is essential. This chapter explores the measurement and management of
workplace performance, drawing insights from work psychology theory and research.

3. Introduction to Performance Management

Performance management is a continuous process involving various activities designed to measure, guide,
and improve organisational performance. It aligns employee performance with the strategic goals of the
organisation. Two key definitions of performance management include:

“A continuous process of identifying, measuring, and developing the performance of individuals and
teams and aligning performance with the strategic goals of the organization." (Aguinis, 2009, p. 21)
“The wide variety of activities, policies, procedures, and interventions designed to help employees
improve their performance. These programs begin with performance appraisals but also include
feedback, goal setting, training, and reward systems." (DeNisi & Murphy, 2017)

Work and organisational psychologists have contributed substantially to understanding performance

management, particularly in performance measurement and appraisal. However, the broader concept of
performance management also emphasises employee development, aiming to improve performance
through various strategies and interventions.

The Performance Management Process Model

Murphy and DeNisi (2008) present a model that illustrates the performance management process as a flow
diagram (Figure 7.1). This model outlines how performance management is built on organisational goals and
strategies and then translated into individual performance objectives and interventions.

Key Aspects of the Performance Management Model:

1. Alignment with Organisational Strategy and Goals: The process begins by ensuring that individual
goals are directly aligned with the broader organisational strategies. This alignment is essential to
ensure that individual efforts contribute effectively to the organisation’s overall performance (Aguinis,
2009). For example, in educational settings, organisational objectives might include targets for student
exam pass rates, broken down into specific teacher performance goals.
 2. Performance Standards and Measurement: Performance standards are derived from these goals,
serving as benchmarks for individual and team performance. Performance measurement, typically
through appraisals, assesses employee performance at a given point. This appraisal compares
the observed performance against the desired performance standard.

3. Feedback and Development: Feedback is provided to employees after performance is measured. If a

gap exists between observed and desired performance (i.e., where performance does not meet the
required standard), the next step involves introducing performance management interventions. These
interventions, such as training, coaching, or goal setting, are designed to improve performance.

4. Cyclical and Continuous Process: Performance management is not a one-off activity. The process is
cyclical, with continuous performance assessment, feedback, and goal setting aimed at ongoing
improvement. Goals are adjusted based on organisational needs and progress, ensuring a consistent
alignment between individual performance and organisational objectives.

Summary of the Performance Management Process:

Organisational Strategy: Drives the overall goals and objectives for the organisation.
Individual and Team Goals: Derived from the broader strategy and set measurable employee
objectives.
Performance Measurement: Assess current performance levels through appraisals and
comparisons against set standards.
Feedback and Development: Provides insight into performance gaps and introduces interventions
for improvement.
Continuous Improvement: Reinforces the idea that performance management is a never-ending
process of goal-setting, measuring, and developing.

By integrating assessment and development, performance management is a strategic tool for enhancing
individual and organisational performance.

4. Goal Setting

Goal-setting is a fundamental aspect of performance management and is a theory extensively supported by

research. Developed primarily by Locke and Latham, goal-setting theory emphasizes the use of specific
and challenging goals to enhance performance. In organisational contexts, setting goals ensures that
individual performance aligns with the organisation's broader objectives, serving both strategic and
operational functions.

Key Findings of Goal-Setting Research

1. Goal-Setting Enhances Performance:

Research shows that setting specific goals leads to significantly higher performance than having
no goals or setting vague goals (Locke & Latham, 1980).
More difficult goals tend to result in greater effort and improved performance, but only when
individuals possess the necessary skills and abilities to achieve those goals.
 2. Specific and Measurable Goals:

Specific and measurable goals are more effective than general "do-your-best" goals. Locke and
Latham (2002) found that individuals perform better when the expected standards are clear.
Goals should focus not just on results but may also incorporate behavioural changes or
improvements in specific job-related skills or performance areas.

Mechanisms through Which Goals Affect Performance

1. Direction of Behaviour:

Goals channel behaviour toward activities relevant to achieving the goal and away from
distractions.
2. Energizing of Behaviour:

Setting challenging goals leads individuals to exert greater effort toward reaching those
objectives.
3. Persistence:

More difficult goals tend to increase persistence as individuals prolong their efforts to succeed.
However, this persistence cannot be maintained indefinitely without breaks or proper pacing,
especially with tight deadlines.
4. Development of Strategies:

Goals stimulate individuals to develop strategies and skills to meet performance expectations,
promoting learning and adaptation in work settings.

Moderating Factors
Several key factors influence the relationship between goals and performance:

Goal Commitment: How committed individuals are to achieving their goals plays a critical role in
determining goal-setting effectiveness.
Feedback: Providing continuous feedback helps individuals adjust their efforts and strategies
toward goal achievement.
Task Complexity: Goal-setting more directly influences simple tasks. Other variables, such as
training and problem-solving, play important roles for more complex tasks.

Goal Orientation Theory

Goal orientation theory differentiates between two types of goals that individuals might pursue in the
workplace:

1. Learning Goal Orientation (LGO):

Individuals with a learning goal orientation focus on developing new skills, gaining knowledge,
and improving competence over time.
LGO fosters adaptive learning and continuous improvement, making it particularly effective in
roles that require problem-solving and skill development.
2. Performance Goal Orientation (PGO):
 Those with a performance goal orientation are focused on demonstrating their competence and
achieving high-performance outcomes.
PGO is linked to achieving measurable performance targets but can lead to avoidance of
challenges if individuals fear failure.

Implementing Goal-Setting in Performance

Management
For managers to successfully implement goal-setting strategies that drive performance improvement, the
following principles should be considered:

Balance Between Challenge and Ability: Goals should be sufficiently challenging to motivate
employees but not so difficult that they become discouraging. Ensuring employees have the skills and
resources to achieve their goals is essential for success.

Clear Communication and Measurement: Goals should be communicated clearly and must be
measurable so that progress can be tracked effectively.

Provide Regular Feedback: Ongoing feedback helps employees adjust their strategies, stay motivated,
and focus on their goals. Feedback also strengthens goal commitment.

Adjust for Task Complexity: It is important to break goals into smaller, manageable milestones and
provide training or learning opportunities for complex tasks.

Incorporate Learning and Performance Goals: Managers should recognize the value of learning
goals (LGO) for roles requiring continuous development and performance goals (PGO) with clear,
measurable outcomes. A balanced approach can promote both personal growth and organizational
success.

By applying these strategies, goal-setting can effectively enhance individual and organizational performance
and ensure alignment with broader business objectives.

5. Conditions for Positive Performance Change

The conditions for positive performance change are rooted in an interaction between the individual’s
traits and characteristics and the demands placed upon them by their work environment. Two prominent
psychological theories, Trait Activation Theory and the Theory of Work Adjustment, provide frameworks
for understanding how individuals respond to job demands and perform effectively.

Trait Activation Theory (Tett & Burnett, 2003)

Trait Activation Theory offers a way to understand the link between an individual’s personality traits and work
performance. The central idea is that specific work situations activate personality traits, guiding
performance behaviour. Key points from the theory are:
 Situational demands activate traits: Individual differences in traits are stimulated by work tasks or
the work context (e.g., social interactions or organisational culture).
Performance behaviours are a response to the situation: When an individual’s traits are aligned
with the job demands, they are more likely to express behaviours that lead to positive performance.
Reward structures shape behaviour: The presence of both intrinsic (e.g., personal satisfaction)
and extrinsic rewards (e.g., financial bonuses) influences how individuals respond to job demands,
guiding behaviour towards desired outcomes.
Trait consistency with job requirements: Positive performance occurs when there is alignment
between an individual’s traits and the job demands. For example, a highly extroverted person is
likely to perform well in a role that requires social interaction, as the job demands activate their
natural tendencies.

This theory also highlights the concept of situation strength. Strong situations (highly structured and
prescriptive) reduce the influence of personality traits on performance, while weaker situations (allowing
more autonomy) give individuals more freedom to express their traits. In weaker situations, individual
performance differences are more likely to be observed.

The Theory of Work Adjustment (Dawis & Lofquist,

1984)
The Theory of Work Adjustment expands the understanding of performance by explaining how individuals
adapt when there is a misalignment between their KSAOs (Knowledge, Skills, Abilities, and Other
characteristics) and the demands of their job. This theory suggests that performance is most positive when
there is a good fit between the person and their work environment. However, when this fit is poor, individuals
can take two primary actions to adjust and ensure positive performance:

1. Job crafting: Involves making changes to the job or altering aspects of tasks to improve alignment with
individual strengths. For example, a worker may proactively seek tasks that match their competencies or
negotiate role changes that allow them to use their skills more effectively.

2. Self-development: If a person feels their abilities or traits are not sufficient for the job's demands, they
can engage in learning and development activities (such as training or coaching) to enhance their
capabilities and improve their fit for the job.

This concept aligns with recent research (Woods et al., 2019), which suggests that personality traits can
evolve through work experiences, particularly when people engage in developmental activities to improve
their job fit.

Practical Implications
To promote positive performance change:

Organisations should align job demands with employee traits to activate positive performance
behaviours.
Rewards and recognition systems should be designed to reinforce desired behaviours,
encouraging individuals to perform at their best.
Opportunities for learning and development should be embedded in the workplace to allow
individuals to adjust and grow when their traits and job demands misalign.
Managers can consider offering employees greater autonomy in weak-situation jobs to allow
individual strengths to emerge and flourish.
Positive performance change occurs when there is an optimal fit between the individual’s traits and the
demands of the work environment, alongside the opportunity for continuous learning and development.

6. Measuring Job Performance

One of the common challenges in management and human resources is that while many managers can
intuitively gauge whether employees are performing well or poorly, they often struggle to quantify this
performance (Woods, 2008). This issue of defining and measuring job performance also extends to the field
of work psychology, where job performance is considered so vital that it is often referred to as "the criterion"
(Dalal, 2005). The "criterion problem" highlights the difficulty of establishing robust and reliable performance
criteria in applied research (Austin & Villanova, 1992; Thayer, 1992). Psychologists, particularly in
performance management, have invested considerable effort into developing methods for accurately
measuring job performance (DeNisi & Murphy, 2017).

Accurate measurement is critical because job performance data underpins a wide range of organizational
activities, including the validation of selection systems, evaluation of training and development programs,
and promotion decisions. Without clear metrics, these activities can suffer from poor decision-making. But
what does performance measurement involve?

Tannenbaum (2006) defines job performance measurement as:

"The collection and use of judgements, ratings, perceptions, or more objective sources of information to
better understand the performance of a person, team, unit, business, process, program, or initiative to guide
subsequent actions or decisions."

This definition highlights several methods for measuring performance, such as subjective judgements or
more objective data. However, two key questions emerge: What exactly constitutes job performance? And
how should it be measured? These questions are interrelated, as the definition of job performance will often
shape the methods used to measure it. Therefore, the process requires careful consideration of what
performance is and how best to capture it.

6.1. Objective measures of job performance

Objective performance measures rely on quantifiable data to assess how well employees perform their tasks.
These measures are straightforward and are often used in specific roles where outcomes are easy to
capture. Some of the core types of objective measures include:

Core Task Measures

1. Sales Figures: Commonly used in sales jobs, sales performance can be measured by volume,
monetary value, or how much a person exceeds their targets. Sales figures can also be adjusted for
external factors, such as territory or customer base size ("sales patch").
 2. Service Duration: This is used in service-oriented roles, such as call centres, where the length of
customer service calls can be objectively tracked.

3. Utilisation: This measure tracks an employee's time working on productive tasks, particularly in
consultancy roles, where on-contract work hours are compared to off-contract hours.

4. Results: Objective outcomes that can be quantified, such as project completion or measurable
deliverables.

5. Production Output: In manufacturing or production-based jobs, performance can be objectively

measured by the number of products created or processed.

6. Quality: In jobs focused on production, objective quality measures, such as defect rates, can be used to
assess performance.

Proxy Measures
Proxy measures are used when direct performance data may not be available. These measures, while
objective, may not directly reflect job performance and may not be as accurate as core task measures:

1. Absence: An employee’s attendance record can sometimes be used as a performance indicator,

assuming frequent absences affect productivity. However, this data is often difficult to interpret
accurately due to various external factors affecting absenteeism.

2. Safety Record: In industries where safety is critical, the number of accidents or safety incidents
recorded can be tracked as a performance measure.

3. Tardiness/Timekeeping: Data on punctuality, such as clocking-in times, can indicate an employee’s

work ethic or discipline but may not always correlate with actual performance.

Limitations of Objective Measures

Although objective performance data may seem robust and straightforward, several limitations need to be
considered:

1. Subjectivity in Interpretation: Even seemingly objective data often requires subjective judgement. For
example, a supervisor may need to decide what level of sales figures is acceptable, introducing
subjectivity into what may seem like a purely objective measure.

2. External Factors: Objective measures do not always capture the external factors that can impact
performance. A high-performing employee might have poor sales due to market conditions, or a poorly
performing employee could show strong numbers in a booming market. Thus, these measures might not
fully reflect the individual's contributions or efforts.

3. Focus on Results Over Behaviour: Objective measures typically focus on the outcomes of an
employee’s efforts but fail to explain why some people perform better than others. They do not capture
the behaviours or processes that lead to those results, which could be more indicative of future
performance.
Behavioural Focus
Work psychologists often argue that performance should be measured by examining behaviour at work
rather than just the results achieved. According to Motowidlo, Borman, and Schmitt (1987), behaviours reflect
what employees do in their roles, and measuring these can give a clearer indication of performance,
independent of external factors.

Example 1: A salesperson may have low sales figures due to poor economic conditions, but if they
consistently demonstrate desirable behaviours (e.g., customer engagement, persistence, and teamwork),
they should not be classified as a poor performer.

Example 2: An employee might show excellent production rates, but if this is due to the support of a
strong team or favourable market conditions rather than their efforts, it raises questions about their true
performance.

Conclusion
While objective measures of performance offer clear, quantifiable data, they do not provide a complete
picture of why individuals succeed or fail in their roles. Performance measurement focusing solely on
outcomes can overlook the behaviours and external factors contributing to those results. A balanced
approach incorporating objective measures and behavioural analysis is crucial for a more comprehensive
and fair assessment of employee performance.

6.2. Models of job performance behaviour

Most people can form general impressions about their colleagues or subordinates. While often valid, these
judgments are prone to certain biases and limitations. One common bias is the halo effect (Viswesvaran et
al., 2008), which occurs when a person forms an overly favourable impression of someone and lets that
impression influence their evaluation of all aspects of their performance. The opposite, the horns effect,
occurs when an unfavourable impression leads to unduly negative evaluations.

In addition to biases, these general evaluations often lack specificity. Without detailed insights, it can be
difficult to identify which performance areas are strong and which are weak. Performance needs to be broken
down into multifaceted or multidimensional models to address this. These models allow for a clearer
understanding of performance by categorising various behaviours into distinct dimensions, each representing
a different aspect of job performance.

Multidimensional Models of Performance

Because jobs place different demands on employees, they elicit various behaviours. Multidimensional
models cluster job performance behaviours into broad, homogeneous dimensions to account for this
complexity. Each dimension represents a group of behaviours that share a common theme. By identifying
and grouping similar behaviours, these models make assessing and improving performance in specific areas
easier. For example, key performance behaviours for managers could include tasks such as:

Formulating short- and long-term team objectives

 Organising and prioritising work

Both activities are related to the broader theme of planning and organising (Borman & Brush, 1993). By
grouping similar tasks, multidimensional models provide a structured way to evaluate performance, helping
organisations and employees to effectively target development efforts.

Diverging Approaches to Job Performance Models

The multidimensional approach to performance evaluation has led to the development of two major
perspectives:

1. Task Performance vs. Contextual Performance:

Task performance refers to the core activities directly related to an employee's job, such as
achieving work targets or completing assigned duties. These behaviours are essential for the
effective functioning of the role.
Contextual performance includes behaviours that support the broader organisational, social,
and psychological environment, such as helping co-workers or volunteering for additional
responsibilities. These behaviours may not be part of the formal job description but contribute
positively to the work environment.
2. Counterproductive Work Behaviours (CWB):

In contrast to contextual performance, CWB refers to behaviours that harm the organisation or
hinder others' work. Examples include absenteeism, theft, or deliberately low productivity. While
CWB is the opposite of contextual performance, it can impact task performance and overall
organisational success.

Both approaches highlight the importance of evaluating employees based on various performance
dimensions rather than relying on general impressions or singular objective measures. By using these
models, organisations can identify specific areas for improvement and provide targeted feedback to
employees.

Multidimensional job performance models are crucial for capturing the complexity of work behaviours. These
models help to break down performance into key dimensions, making evaluations more precise and
actionable. This approach benefits both organisations and employees, providing a clear pathway for personal
and professional development while aligning individual performance with organisational goals. By moving
beyond biased and overly simplistic evaluations, multidimensional models enhance the accuracy and
usefulness of performance assessments.

6.3. The competency approach to performance measurement

The competency approach to performance measurement is a widely adopted method for analysing job
performance. This approach focuses on identifying the skills, abilities, and attributes that underpin effective
performance.
 Growing Popularity: Over the last 20 years, competency modelling has become increasingly
popular, with most large organisations integrating competency-based assessments into their HR
strategies to enhance employee performance and organisational effectiveness.
Relevance to HR Strategy: By utilising competency modelling, organisations can ensure that their
HR practices align with overall strategic objectives.

Definition of Competencies
Competencies are essential elements that contribute to an individual's performance within a job role.

General Definition:
Competencies refer to the combined knowledge, skills, abilities, and other characteristics
necessary for effective performance.
They serve as benchmarks for assessing and differentiating superior performance from average
performance.
Observable and Measurable:
Competencies must be observable in behaviour and measurable, allowing for accurate employee
performance assessments.

Criticism of Competency Definitions

Despite the widespread use of competency models, several criticisms have emerged:

Conceptual Muddle:
Critics argue that competency definitions can be inconsistent and lack clarity, confusing
practitioners (Voskuill & Evers, 2008).
Lack of Standardisation:
There is no universally accepted format for representing competencies, leading to discrepancies
in application and understanding across different organisations.
Best Practices:
Recent advancements in competency modelling have focused on establishing best practices that
enhance the effectiveness and applicability of competencies in HRM (Campion et al., 2010).

Benefits of Competency Modelling

Competency modelling offers several benefits to organisations, which include:

Horizontal Integration:

Competency modelling facilitates the alignment of various HR processes, such as:

Selection: Ensuring hiring practices are consistent with the competencies required for effective
job performance.
Development: Tailoring training and development programmes to address specific
competency gaps.
Performance Management: Establishing performance evaluation criteria based on clearly
defined competencies.
Vertical Integration:

Aligns individual performance requirements with the strategic objectives of the organisation.
 This alignment ensures that employees’ goals and competencies are directly linked to the
organisation's vision and mission.

Behavioural Definition of Competencies

A fundamental aspect of competencies is their behavioural definition, which allows for a more nuanced
assessment of employee performance.

Components of Competency Assessment:

Labels and Broad Definitions: Each competency should be clearly labelled with a broad
definition that outlines its scope.
Behavioural Indicators: Competencies are assessed through observable behaviours, which are
broken down into specific indicators:
Positive Indicators: Behaviours that demonstrate effective job performance and the presence
of competency.
Negative Indicators: Behaviours that indicate ineffective performance, which help identify
improvement areas.

Approaches to Competency Modelling

There are two primary approaches to competency modelling:

1. Universal Competencies:

This approach aims to identify competencies that are applicable across various jobs or within
specific job families.
Example: The Great Eight Competencies (Bartram, 2005):
Derived from analysing major individual differences such as:
The Big Five Personality Traits: Include openness, conscientiousness, extraversion,
agreeableness, and neuroticism.
General Mental Ability: Reflects cognitive capabilities.
Need for Power/Achievement: Represents motivational factors that drive performance.
These eight competencies are designed to be broadly applicable, though specific roles may
emphasise different competencies to varying degrees.
2. Contextual or Strategic Approach:

This approach recognises the importance of context in defining competencies.

Key Features:
Competencies are tailored to reflect the strategic needs of the organisation.
This method considers the unique performance demands of different sectors and roles,
leading to more relevant and effective competency frameworks.

Example Competency: Project Management

Project management exemplifies a competency that requires a range of skills and attributes for successful
execution.

Definition:
 Project management is the art of creating accurate and effective schedules with a well-defined
scope while maintaining accountability for the successful execution of projects.
Proficiency Levels:

Level 1:
Identifies risks and dependencies, communicating these routinely to stakeholders.
Appropriately escalates blocking issues when necessary to ensure progress.
Understands project objectives, expected quality, and relevant metrics.
Level 2:
Develops systems to monitor risks and dependencies, reporting changes as necessary.
Works effectively across disciplines to achieve timely decisions on project-related issues.
Develops methods to track and report metrics that link project quality to business value.
Level 3:
Anticipates changing conditions that may impact risks and takes proactive preventive actions.
Evaluate project outcomes based on return on investment and ensure alignment with
business needs.
Proactively inspires team members to address potential issues that may affect project success.
Level 4:
Instils a culture of effective decision-making across organisations, enabling teams to respond
to internal and external changes.
Evaluate project results against benchmarks and incorporate lessons learned for future
improvements.
Champions business value by ensuring alignment and commitment to long-term project
deliverables across multiple teams.

The Great Eight Competencies (Bartram,

2005)
Bartram's Great Eight competencies represent critical areas that influence job performance. These
competencies include:

1. Analysing and Interpreting:

The ability to gather and assess information effectively.
2. Enterprising:
Demonstrating initiative and a proactive approach to problem-solving.
3. Performing:
Delivering high-quality results consistently.

Managerial Competencies (Tett et al.,

2000)
Tett et al. (2000) identified a comprehensive model encompassing 58 management competencies, which are
grouped into several key categories:

Traditional Functions:

Core functions essential for effective management, such as:

 Problem awareness
Decision-making
Team-building
Monitoring and evaluating performance
Task Orientation:

Focuses on specific behaviours that contribute to task completion, including:

Urgency and decisiveness
Cooperation and sociability
Customer focus and seeking input
Dependability:

Attributes that reflect reliability, such as:

Professionalism
Trustworthiness
Loyalty and responsibility
Open-mindedness:

Includes the capacity to adapt and remain flexible, with traits such as:
Tolerance and resilience
Creative thinking
Communication Skills:

Emphasises effective communication methods, including:

Listening skills
Oral and written communication
Developing Self and Others:

Focuses on self-improvement and mentoring others, encompassing:

Goal-setting and developmental feedback
Self-development and enrichment opportunities

The competency approach to performance measurement provides valuable frameworks for understanding
and enhancing job performance. Both universal and contextual models offer insights into the competencies
necessary for success across different roles and sectors.

Integration of Approaches:
By combining both approaches, organisations can establish robust competency frameworks that
identify common factors for success and address the unique demands of specific roles and
contexts.
Strategic Importance:
This strategic focus ensures that competencies remain relevant and actionable, ultimately leading
to improved organisational performance outcomes.
6.4. The process of performance measurement: Appraisal

Performance appraisal is a critical process for evaluating an employee's work performance. This process
involves various models that help practitioners determine what aspects of performance to measure based on
the specific context of the job and the organisation.

Definition of Performance Appraisal:

Generally referred to as the systematic evaluation of employee performance, performance

appraisal may also encompass performance improvement activities.
Importance of Context:

The appraisal process is informed by job-specific information and the broader organisational
context, enabling a more tailored assessment of competencies.

Survey Items and Rating Scales

Performance appraisals often utilise simple rating scales as a common means of collecting performance
judgements.

Breakdown of Performance Dimensions:

Performance dimensions are divided into constituent parts to facilitate focused evaluations.
Raters use specific rating scales to judge performance.

Types of Rating Scales

Verbally Anchored Likert Scales:

Raters assess performance on a scale with descriptive anchors. For example:

1 = Unsatisfactory
2 = Less than adequate
3 = Fair
4 = Good
5 = Very Good
6 = Outstanding
Unanchored Likert Scales:

These scales measure performance on a numeric scale without descriptive anchors, where:
1 = Unsatisfactory to 5 = Outstanding.
Graphic Scales:

Visual representation of performance levels, with a continuum ranging from unsatisfactory to

outstanding.
Comparative Scales:

Raters compare the employee’s performance to others, using descriptors such as:
1 = Is one of the very poorest performers.
5 = Is one of the top few performers.
Measuring Three Dimensions of Job Performance
Box 7.7 provides an example of using a rating scale to evaluate performance across three dimensions:

Key Items to Rate:

Completeness of assigned duties.

Fulfilment of job responsibilities.
Engagement in activities impacting performance evaluation.
Rating Scale Example:

Responses range from "Almost Never" to "Almost Always," allowing for nuanced feedback on
various performance aspects.

Improving Rating Scales and Appraisal

Measures
Performance ratings can be subjective, influenced by biases and personal perceptions.

Strategies to Enhance Rating Accuracy

Training for Raters:

Providing raters with training can reduce biases and improve the consistency of performance
evaluations. Training helps raters become aware of their biases and enhances the objectivity of
their assessments.
Utilisation of Behaviourally Anchored Rating Scales (BARS):

BARS incorporate specific behavioural examples to clarify performance expectations. This

approach ensures ratings are grounded in observable behaviours rather than abstract traits.

Addressing Common Issues

Distribution of Ratings:
Raters may unintentionally skew ratings towards extremes. A normal distribution approach helps
ensure more accurate representations of performance levels.

Results-Based Appraisal
The results-based appraisal method evaluates employees based on the outcomes they achieve, focusing on
goal attainment.

Key Features of Results-Based Appraisal

Objective Evaluation:

Emphasis is placed on measurable outcomes rather than subjective assessments. This method
aligns with management by objectives (MBO) principles.
Challenges:
 Determining an employee's exact contribution to broader organisational results can be difficult,
making it essential to carefully consider how performance is assessed.

Concerns with Reliability

Reliability Issues:
Rating consistency can vary significantly, leading to questions about their reliability. The
assessment process should aim for high reliability to ensure fair evaluations.

Competency-Based Appraisal
This approach integrates competencies and their definitions into the performance appraisal process.

Structure of Competency-Based Appraisal:

Competencies are detailed in performance dimensions, facilitating a structured approach to
evaluating employee behaviours and skills.

Advantages of Competency-Based Appraisal

Behavioural Framework:
Competency-based appraisal helps structure the assessment of performance behaviours,
clarifying expectations and performance standards.
Focus on Development:
This approach assesses current performance and identifies areas for employee development,
enhancing overall organisational performance.

The appraisal process is a vital component of performance measurement in organisations. Organisations

can gain valuable insights into employee performance by utilising various methods, including rating scales
and competency frameworks.

Holistic Evaluation:
Effective appraisal combines multiple perspectives and methodologies, leading to more
comprehensive and actionable insights into employee performance.
Continuous Improvement:
The appraisal process should be dynamic, incorporating feedback and adjustments to ensure it
remains relevant and effective in achieving organisational goals.

7. Performance Management

Performance feedback is an essential component of performance management. It serves as a mechanism

for informing employees about their performance, fostering improvement, and guiding their professional
development.

Importance of Feedback:
Effective feedback helps employees understand their progress towards objectives.
 It builds confidence, identifies areas for improvement, and promotes engagement within the
organisation.
Aguinis (2009) outlines methods to enhance employee feedback, emphasising its developmental
purpose.

Characteristics of Effective Feedback (Box

7.10)
Effective feedback possesses several key characteristics that enhance its impact on employee performance:

Timeliness:

Feedback should be delivered close to the event or performance episode to ensure relevance.
Frequency:

Regular and continuous feedback helps maintain performance awareness and improvement.
Specificity:

Feedback must focus on specific behaviours or aspects of performance, providing clear guidance.
Verifiability:

Effective feedback is based on accurate, verifiable evidence rather than assumptions or rumours.
Consistency:

The tone and nature of feedback should remain consistent over time to avoid confusion.
Privacy:

Feedback should be given in a private setting to avoid embarrassing the employee.

Consequences:

Communicating the potential consequences of behaviours helps contextualise feedback.

Description First, Evaluation Second:

Providing clear descriptions of behaviours before evaluations ensures that employees

understand what is being assessed.
Performance as Continuous:

Focus on demonstrating more effective behaviours rather than merely labelling performance as
good or bad.
Pattern Identification:

Highlighting performance patterns, rather than isolated mistakes, provides a clearer

understanding of issues.
Confidence in the Employee:

Managers should communicate confidence in employees, ensuring that negative feedback is

directed at behaviours, not the person.
Advice and Idea Generation:
 Managers should provide suggestions for improvement and invite input from employees on
potential solutions.

Balancing Positive and Negative Feedback

Feedback to employees typically includes positive and negative information, with negative feedback often
being the more challenging aspect for managers.

Role of Negative Feedback:

While negative feedback can be difficult to deliver, it is crucial for helping employees understand
how to improve.
Without constructive feedback, employees lack the information necessary to make informed
decisions about their performance.
Constructive Feedback:

Evidence suggests that poorly delivered feedback can be less effective than no feedback (Kluger &
DeNisi, 1996).
How feedback is communicated can significantly influence its effectiveness and the employee's
response.

Mechanisms Underlying Feedback

Responses
Research in work psychology has explored how employees respond to feedback on their performance.

Cognitive Processes:

Feedback triggers a series of cognitive mechanisms that shape individual reactions and
judgments.
Kluger and DeNisi (1996) developed a model to explain these mechanisms, highlighting several
important implications:
Feedback Accuracy:
Employees evaluate the accuracy of feedback, which is influenced by the credibility of the
communicator and the overall feedback environment.
Feedback-Rich Environment:
An environment where feedback is specific, frequent, and positive enhances the perceived
accuracy of feedback.
Desire to Respond:

The perceived accuracy of feedback influences an employee's desire to respond constructively to

it.
The intention to respond leads to the formation of intended actions to improve performance.

Parallels with Planned Behaviour Theory

There are notable similarities between the feedback response model and Ajzen's theory of planned
behaviour.
 Step from Intention to Behaviour:

Various attitudinal and cognitive processes influence the transition from intention to actual
behaviour.
Feedback plays a crucial role in shaping these processes, particularly about how employees
perceive and act on negative feedback.
Implications for Negative Feedback:

Negative feedback is often perceived as less accurate than positive feedback, leading to potential
biases in its reception.
Creating a feedback-rich environment for negative feedback may enhance its perceived accuracy
and effectiveness.

Performance feedback is critical in the performance management process, impacting employee

engagement, performance improvement, and overall organisational effectiveness.

Effective Feedback Practices:

To maximise the impact of feedback, organisations should focus on delivering timely, specific,
and constructive feedback while fostering an environment that encourages openness and
continuous improvement.
Continuous Development:
Emphasising the developmental aspect of feedback helps build a culture of learning and growth,
ultimately leading to enhanced performance outcomes.

7.1. Multi-source feedback

Multi-source feedback, commonly known as 360-degree feedback, involves gathering performance ratings
from various sources, including peers, subordinates, supervisors, and sometimes customers or clients. This
approach contrasts with traditional performance assessments, which rely on supervisor ratings alone.

Origin and Popularity:

360-degree feedback emerged in the UK and Europe during the 1990s and has gained popularity
in organisations for its comprehensive nature.

Advantages of Multi-Source Feedback

Multi-source performance ratings are appreciated for several reasons:

Comprehensive Assessment:

By gathering feedback from multiple sources, organisations can obtain a more thorough
assessment of an employee's performance across various contexts.
Limitations of Supervisor Ratings:

Supervisor evaluations may be based on limited interactions, as they may not witness an
employee's performance in peer interactions or subordinate roles.
 Broader Perspective:

Multi-source feedback provides a more holistic view of performance, capturing a wider range of
behaviours and competencies.

Implementation Challenges
Despite the advantages, multi-source feedback systems face several challenges:

Rating Instruments:

Feedback surveys are often employed to collect performance ratings. Raters use scales to
indicate the effectiveness of particular behaviours.
Rater Anxiety:

Self-ratings can lead to discomfort, especially if the rated individual feels uneasy about naming
raters or being assessed by subordinates.
Feedback Process:

Data is compiled by a central administrator or the individual providing feedback. Ratings are
typically averaged, but the dispersion of scores across different sources is crucial for
understanding performance nuances.

Conceptual Challenges
A key conceptual issue in multi-source feedback systems is understanding how different raters conceptualise
performance dimensions:

Measurement Equivalence:

Studies indicate that ratings provided by different sources are conceptually similar for certain
performance dimensions (Facteau & Craig, 2001; Maurer, Raju, & Collins, 1998).
Divergence of Ratings:

Research by Viswesvaran, Schmidt, and Ones (2002) found that supervisor and peer ratings
converge on some dimensions but not on others, indicating potential discrepancies in how
different roles view performance.

Practical Concerns in Multi-Source

Feedback
When organisations consider implementing 360-degree feedback, they face practical issues that can impact
its effectiveness:

Development vs. Appraisal:

There is no definitive strategy for 360-degree feedback, as the choice between development and
formal appraisal can be complex. Each approach presents its unique challenges and benefits.
Potential for Bias:
 Ratings might be compromised if evaluators know their assessments could affect the individual’s
pay or status. This can result in inflated or deflated ratings based on personal stakes.
Subordinate Ratings:

Evidence suggests that subordinate ratings may be less effective for formal appraisal purposes
compared to developmental feedback. Subordinates might be less willing to provide honest
assessments if they fear repercussions.

Research Findings
An important meta-analysis by Smither, London, and Reilly (2005) focused on the effects of 360-degree
feedback on performance improvement:

Small Improvements:

The findings indicated that 360-degree feedback resulted in only modest performance
improvements.
Role of Subordinate Ratings:

Subordinate ratings showed the most significant increase in performance improvement,

highlighting the importance of perspectives from those working closely with the individual.
Factors Influencing Improvement:

Various factors contribute to the effectiveness of 360-degree feedback, including:

Personal dispositions.
Reactions to feedback.
Beliefs about change and self-efficacy in goal-setting.

Multi-source feedback, particularly 360-degree feedback, is a valuable tool for performance assessment
when implemented thoughtfully. While it provides a comprehensive view of employee performance, several
factors can affect its effectiveness, including the context in which it is applied and the attitudes of those
providing feedback.

Effective Application:
The success of 360-degree feedback depends not merely on its use but also on how it is
integrated into an organisation's performance management framework.
Focus on Context:
Tailoring the feedback process to suit the organisation's specific context can significantly enhance
its value and the likelihood of meaningful performance improvement.

8. Interactive and Organisational Models of Performance Management

Work and organisational psychologists are increasingly interested in macro and integrative perspectives on
performance management. This shift addresses the limitations of solely focusing on individual performance,
recognising that improving individual contributions may not always lead to enhanced company-level
performance.
 Challenges Identified:
The relationship between individual contributions and overall company performance is complex
and not always direct (DeNisi & Smith, 2014).

ProMES: An Integrative Approach

The Productivity Measurement and Enhancement System (ProMES) is designed to improve organisational
productivity through effective measurement and feedback.

Key Features of ProMES

Foundation:
ProMES is built on the premise that productivity reflects how effectively an organisation utilises
its resources to achieve goals.
Integration of Motivation Theory:
The system incorporates expectancy theory and goal-setting theory to ensure that performance
is guided and not just measured.

Steps in the ProMES Approach

1. Formation of a Team:
Establish a team to design the intervention tailored to the specific unit and the wider
organisation.
2. Development of Objectives:
Agree on quantifiable measures of progress towards established unit objectives (indicators),
which must be objectively verifiable.
3. Performance Standards:
Set performance standards that define the effectiveness of different levels of the indicators.
4. Measurement and Translation:
Measure the indicators and translate these measurements into effectiveness data for the work
unit.
5. Feedback Mechanism:
Provide written feedback on measurement information to all team members.
6. Communication and Exploration:
Facilitate discussions about the feedback to promote continuous improvement.

Benefits of ProMES
Goal Setting:
The system integrates goal-setting by establishing clear standards and providing specific, relevant
feedback to team members.
Empirical Support:
A meta-analysis of multiple studies indicates significant productivity improvements when
implementing ProMES, with an increase of approximately 1.44 standard deviations.
Environmental Sustainability: The Role of
Performance Management
Performance management enables organisations to achieve their goals, including environmental
sustainability.

Key Considerations
Integration of Sustainability Goals:
To foster environmental responsibility, organisations must translate their sustainability goals into
actionable objectives for teams and individuals.
Corporate Social Responsibility:
As consumers become more aware of corporate impact on the environment, businesses need to
incorporate sustainability into their performance metrics.

ProMES and Environmental Performance

ProMES can help identify performance indicators related to environmental efficiency that can be
continuously monitored.

Awareness of Impact:

Involving teams in developing performance indicators enhances their understanding and

accountability for environmental performance.

High-Performance Work Systems (HPWS)

HPWS are systems of HR practices designed to improve employee skills, commitment, and productivity,
thereby creating a sustainable competitive advantage.

Research Findings
Studies show that HPWS positively impacts organisational performance and employee empowerment.
For example, research by Aryee et al. (2012) indicated that HPWS enhances service performance by
empowering employees to make decisions.

Observable Effects:

The implementation of HPWS leads to improved service orientation and individual behaviours
aligned with organisational goals.

Summary of Effects
HPWS operate at different levels, positively influencing both overall firm performance and individual
behaviour.

Diversity and Inclusion

The management of diversity and inclusion is increasingly recognised as essential for improving
organisational performance.
Importance of Diversity Management
Effective management practices related to diversity and inclusion significantly affect business
outcomes. Armstrong et al. (2010) examined how Diversity and Equality Management Systems
(DEMS) impact performance.

Key Findings
Impact on Performance:
DEMS enhance performance beyond HPWS by ensuring all employees can develop their skills and
feel valued.
Significant Results:
Studies showed that organisations employing DEMS experience higher productivity, greater
workplace innovation, and lower employee turnover.

Integrating effective performance management strategies, including ProMES, HPWS, and diversity
management, is crucial for enhancing organisational performance.

Business Case for Diversity and Inclusion:

Specific actions to improve diversity management positively impact overall organisational
performance, demonstrating the strategic value of fostering an inclusive workplace.

8.1. Activity

Activity
[ Optionally add 1 question in here. Clearly attribute
any direct references/diagrams used from the
textbook or other resources. ]

Activity Memo
[ Add the memorandum for the activity here. ]
9. Title Placeholder

[ Develop lesson material here. Divide the material into pages, as

you would have developed an interactive PowerPoint
Presentation. Therefore, pages should be summaries,
highlighting the most important aspects of the content and in full
sentences. ]

Applicable to PT: "Indicate which sections will require video

delivery or voice over, e.g. the explanation of complex content.

9.1. Subtitle Placeholder

[ Develop lesson material here. Divide the material into pages, as

you would have developed an interactive PowerPoint
Presentation. Therefore, pages should be summaries,
highlighting the most important aspects of the content and in full
sentences. ]

Applicable to PT: "Indicate which sections will require video

delivery or voice over, e.g. the explanation of complex content.

9.2. Subtitle Placeholder

[ Develop lesson material here. Divide the material into pages, as

you would have developed an interactive PowerPoint
Presentation. Therefore, pages should be summaries,
highlighting the most important aspects of the content and in full
sentences. ]
 Applicable to PT: "Indicate which sections will require video
delivery or voice over, e.g. the explanation of complex content.

9.3. Activity

Activity
[ Optionally add 1 question in here. Clearly attribute
any direct references/diagrams used from the
textbook or other resources. ]

Activity Memo
[ Add the memorandum for the activity here. ]