(Part 2) : System

Implementation
Chapter one

Defining performance and

choosing a measurement
approach
 Defining Performance……
• Performance is about behavior or what employees do, not about
what employees produce or the outcomes of their work.
• Performance management systems typically include the
measurement of both behaviors (how the work is done) and the
results (the outcomes of one’s work).
• Performance is-
• Evaluative (i.e., we judge it based on whether it helps
advance or hinder organizational goals) and
• Multidimensional (i.e., many behaviors are needed to
describe an employee’s performance).
  Determinates of performance
• A combination of three factors allows some people to perform at higher levels
than others:
• (1) declarative knowledge, (2) procedural knowledge, and (3) motivation.
• Declarative knowledge is information about facts and things, including
information regarding a given task’s requirements, labels, principles, and
goals.
• Procedural knowledge is a combination of knowing what to do and how to do
it and includes cognitive, physical, perceptual, motor, and interpersonal skills.
• Finally, motivation involves three types of choice behaviors:

• 1. Choice to expend effort (e.g., “I will go to work today”)

• 2. Choice of level of effort (e.g., “I will put in my best effort at work”
versus “I will not try very hard”)
• 3. Choice to persist in the expenditure of that level of effort (e.g., “I
will give up after a little while” versus “I will persist no matter what”)
• Performance is determined by a combination of
• declarative knowledge (i.e., information),
• procedural knowledge (i.e., know-how), and
• motivation (i.e., willingness to perform).
• Performance = Declarative Knowledge ×
Procedural Knowledge × Motivation.
• If any of the three determinants of performance has a very small
value (e.g., very little procedural knowledge), then performance
will also have a low level.
• All three determinants of performance must be present for
performance to reach satisfactory (and better) levels.
• If any of the determinants has a value of 0, then performance
also has a value of 0.
• For example, A salesclerk who works in a national clothing retail chain has
excellent declarative knowledge regarding the merchandise. Specifically, she
knows all of the brands, prices, sizing charts, and sales promotions. We would
consider her declarative knowledge to be very high. Jane is also intelligent and
physically able to conduct all of the necessary tasks. We would consider Jane’s
procedural knowledge also to be very high. But when customers enter the store,
she does not approach them; instead, she sits behind the cash register and talks on
the phone. When her manager is in the store, she shows a high level of effort, but
her coworkers complain that, as soon as the manager leaves, Jane stops working.
Her overall performance, therefore, is likely to be poor because, although she has
the declarative and procedural knowledge necessary to do the job, she is not
motivated to apply them to her job when her supervisor is not watching her.
• Who have achieved the top level of performance in their fields
(Bill Gates as Microsoft’s founder and businessman, Bobby
Fischer as a chess player), How did they achieve such excellence?
• Answer is: deliberate practice.
• Deliberate practice is different from regular practice and from
simply working many hours a week. Continually observing results
and making appropriate adjustments, and doing that for hours
every day—that’s deliberate practice.- Professor K. Anders
Ericsson of Florida State University
• The famous pianist Vladimir Horowitz was quoted as saying: “If I
don’t practice for a day, I know it; if I don’t practice for two days,
my wife knows it; if I don’t practice for three days, the world
knows it.”
• Deliberate practice involves the following five steps:
• 1. Approach performance with the goal of getting better
and better.
• 2. As you are performing, focus on what is happening
and why you are doing things the way you do.
• 3. Once your task is finished, seek performance feedback
from expert sources, and the more sources the better.
• 4. Build mental models of your job, your situation, and
your organization.
• 5. Repeat steps 1–4 continually and on an ongoing basis.
• Implications for Addressing Performance Problems:
• In order to address performance problems properly, managers must find
information that will allow them to understand whether the source of the
problem is declarative knowledge, procedural knowledge, motivation, or
some combination of these three factors.
• If an employee lacks motivation but the manager believes the source of the
problem is declarative knowledge, the manager may send the employee to a
company-sponsored training program so he can acquire the knowledge that
is presumably lacking.
• This would obviously be a waste of time and resources for the individual,
manager, and organization in Jane’s case because it is lack of motivation,
and not lack of declarative knowledge, that is causing her poor
performance.
• This is why performance management systems need not only to
measure performance but also to provide information about the
source of any performance deficiencies.
• Factors Influencing Determinants of Performance
• The factors that determine performance are affected by the employee (i.e.,
abilities and previous experience), human resources (HR) practices, and the
work environment.
• performance problems may be related more to procedural knowledge and
motivation.
• in terms of motivation, downsizing interventions may have caused a “survivor
syndrome,” which includes retained employees’ feelings of frustration,
resentment, and even anger
  Performance Dimensions
• There are two important facets of performance: task and contextual.
• Task performance refers to the specific activities required by one’s job.
• Contextual performance refers to the behaviors required to be a good
“organizational citizen” (e.g., helping coworkers, supporting company initiatives).
• In addition, voice behavior is another important facet of contextual performance
(i.e., raising constructive challenges with the goal to improve rather than merely
criticize, challenge the status quo in a positive way, and make innovative
suggestions for change when others, including an employee’s supervisor, disagree).
• Both task and contextual performance are needed for organizational success, and
both should be included in a performance management system.
  Approaches to measuring Performance
• Employees do not perform in a vacuum. Employees work
in a specific situation, engaging in specific behaviors
that produce certain results.
• An emphasis on behaviors leads to a behavior-
based approach to assessing performance.
• An emphasis on results leads to a results based
approach to assessing performance.
• An emphasis on the employee leads to a trait-based
approach to assessing performance.
• The relative emphasis given to each of these approaches to measuring performance
should be influenced by the organization’s business strategy.
• For example, an organization emphasizing research and development as its main
strategy would be concerned about results that are not easily observable in the
short term. Thus, an emphasis on behaviors would be consistent with such a
business strategy.
• Behavior-based approach:
A behavior approach emphasizes what employees do (i.e.,
how work is done). This approach is most appropriate
when
(1)the link between behaviors and results is not
obvious,
(2) outcomes occur in the distant future, and/or
(3)poor results are due to causes beyond the
employee’s control.
A behavior approach may not be the best choice if most of
these conditions are not present. In most situations,
however, the inclusion of at least some behavior-based
• Results approach :
A results approach emphasizes the outcomes and results
produced by employees.
This is basically a bottom line approach that is not
concerned with how the work is done as long as certain
specific results are obtained.
This approach is most appropriate when
(1)workers are skilled in the needed behaviors
(2)behaviors and results are obviously related.
• Results approach :
(3)results show consistent improvement over time, and/or
(4)there are many ways to do the job right. An emphasis
on results can be beneficial because it could encourage
employees to achieve the desired outcomes in creative
and innovative ways.
On the other hand, measuring only results is typically not
welcomed by employees even in types of jobs for which
the expected result is very clear (e.g., sales jobs).
• Traits approach
• A traits approach emphasizes individual traits that
remain fairly stable throughout an individual’s life span
(e.g., cognitive abilities or personality).
• This approach may be most appropriate when an
organization anticipates undertaking drastic structural
changes.
• A major disadvantage of this approach is that traits are
not under the control of individuals, and even when
individuals possess a specific positive trait (e.g., high
intelligence), this does not necessarily mean that the
employee will engage in productive behaviors that lead
to desired results.
• Implementing a Behavior Approach to Measuring Performance at Dollar General
• At Dollar General (http://www.dollargeneral.com), a behavior approach is utilized to
measure performance. Tennessee-based Dollar General has 8,000 stores operating in the
United States with more than 64,000 employees. The company sells consumable basics such
as paper products, cleaning supplies, health and beauty products, foods and snacks,
housewares, toys, and basic apparel. As part of the performance management system, Dollar
General has identified behaviors that serve as indicators to underlying competencies. These
behaviors are reviewed and utilized to encourage certain outcomes and provide feedback and
rewards to staff members. For example, the company management sought to improve
attendance among employees. In order to encour age employees to arrive to work on time, a
system was developed to group employees into teams who earn points. A wall chart was
created displaying a racetrack, and each team was given a car that would be moved forward
by the number of points earned each day. After a certain number of laps around the track,
employees on the teams with the most points would be given a choice about how to
celebrate. The program was successful within the first two weeks and increased attendance
significantly. In summary, Dollar General’s performance management system includes the
use of a behavior approach to measuring performance.20
Implementing a Results Approach to Measuring Performance at HomeLoanCenter.com
Companies frequently utilize rewards and incentives as a part of performance management
systems. At HomeLoanCenter.com, there are many bonus and reward opportunities that
emphasize outcomes, or a results approach to measuring performance. HomeLoanCenter.com
is a company based in Irvine (California) that provides home mortgage loans directly to
consumers over the Internet and employs over 600 people. Some of the criteria used to
evaluate perform ance based on outcomes include closing the most loans in a given time
period, bringing in the most revenue, and providing the most referrals. Rewards include
getting the use of a Mercedes or Hummer and a special parking place to the top loan agent of
the month as an acknowledgment of his or her success. Other awards include using the
company’s suite at the Staples Center in Los Angeles for sporting events or concerts or
winning trips to Mexico on CEO Anthony Hsieh’s 60-foot private yacht. In summary,
HomeLoanCenter.com utilizes a performance management system focusing on outcomes or
results in order to motivate employees and bring about business results. The company looks at
what is produced at work rather than at behaviors or how the job gets done.