Lecture 1
Performance management
What is performance?
Performance is behavior of an agent and some norms.
Multiple-level phenomenon
Multi-rater phenomenon
Performance of a teacher is his behavior and for example how many students are passing his
exams. But there are different criteria from different stakeholders (parents, students, deans,
principals et cetera). It is therefore a multi-level phenomenon (individual, work force,
organizational) and a multi-rater phenomenon. Performance management is defined as:”a
continuous process of identifying, measuring, and developing the performance of individuals
and teams and aligning performance with the strategic goals of the organization”
What are the purposes for Performance Management
Strategic: alignment between individual and organizational goals
Administrative: A tool to make administrative decisions: who are the best people?
Communication: employees need feedback where they stand and what is expected of
them
Developmental: how can employees improve themselves? What kind of training is
required?
Organizational maintenance: how many high-talents do we have, how can we make
more profit
Documentation: documentation is important to lay off people that are performing
weakly.
What is performance management about?
Are we doing the things right? Are we doing what we intended to do, that is: are we
in control?
Are we doing the right things: how can we do better what we do, that is: how can we
improve management?
Simple performance model
, Management control systems
How can you influence your employees, so they do a good job? You come across two
different aspects that you have to align:
1. What is desired?
2. What is likely to happen?
Are we doing things right?
If you are not doing the things right, things can go horribly wrong (Barings Bank case). It
shows that if you don’t control your employees well, there can be huge consequences Nick
Leeson. There was a lot wrong from within the performance management of Barings Bank.
What is desired?
1. Start from objectives and strategy: Be as specific as possible!
2. Identify they key actions (KA): ethic behavior
3. Identify key results (KR)
What is likely to happen?
Three issues: do employees understand what they are expected to do (key actions) or to
accomplish (key results)?
1. Lack of directions: are they properly motivated
2. Lack of motivation: are they able to fulfill their desired roles?
3. Personal limitations
Two basic Management Control System-design parameters:
If there is discrepancy between what is desired and what is likely to happen:
What controls should be used?
How tightly should each be applied
What controls should be used?
The actions taken: actions controls
The results produced: result controls
People controls: The types of people employed and their shared values and norms
Avoidance of people: robots
Actions control:
Ensure that employees perform (or do not perform) certain actions known to be beneficial (or
harmful) to the organization. You can only use this, when there is enough information.
Prevention / detection
Usable and effective only when managers:
o Know what actions are desirable ...
o Have the ability to make sure that the desirable actions occur
Three types:
1. Behavioral constraints (eliminate motivational problems)
a. Physical: key access
Performance management
What is performance?
Performance is behavior of an agent and some norms.
Multiple-level phenomenon
Multi-rater phenomenon
Performance of a teacher is his behavior and for example how many students are passing his
exams. But there are different criteria from different stakeholders (parents, students, deans,
principals et cetera). It is therefore a multi-level phenomenon (individual, work force,
organizational) and a multi-rater phenomenon. Performance management is defined as:”a
continuous process of identifying, measuring, and developing the performance of individuals
and teams and aligning performance with the strategic goals of the organization”
What are the purposes for Performance Management
Strategic: alignment between individual and organizational goals
Administrative: A tool to make administrative decisions: who are the best people?
Communication: employees need feedback where they stand and what is expected of
them
Developmental: how can employees improve themselves? What kind of training is
required?
Organizational maintenance: how many high-talents do we have, how can we make
more profit
Documentation: documentation is important to lay off people that are performing
weakly.
What is performance management about?
Are we doing the things right? Are we doing what we intended to do, that is: are we
in control?
Are we doing the right things: how can we do better what we do, that is: how can we
improve management?
Simple performance model
, Management control systems
How can you influence your employees, so they do a good job? You come across two
different aspects that you have to align:
1. What is desired?
2. What is likely to happen?
Are we doing things right?
If you are not doing the things right, things can go horribly wrong (Barings Bank case). It
shows that if you don’t control your employees well, there can be huge consequences Nick
Leeson. There was a lot wrong from within the performance management of Barings Bank.
What is desired?
1. Start from objectives and strategy: Be as specific as possible!
2. Identify they key actions (KA): ethic behavior
3. Identify key results (KR)
What is likely to happen?
Three issues: do employees understand what they are expected to do (key actions) or to
accomplish (key results)?
1. Lack of directions: are they properly motivated
2. Lack of motivation: are they able to fulfill their desired roles?
3. Personal limitations
Two basic Management Control System-design parameters:
If there is discrepancy between what is desired and what is likely to happen:
What controls should be used?
How tightly should each be applied
What controls should be used?
The actions taken: actions controls
The results produced: result controls
People controls: The types of people employed and their shared values and norms
Avoidance of people: robots
Actions control:
Ensure that employees perform (or do not perform) certain actions known to be beneficial (or
harmful) to the organization. You can only use this, when there is enough information.
Prevention / detection
Usable and effective only when managers:
o Know what actions are desirable ...
o Have the ability to make sure that the desirable actions occur
Three types:
1. Behavioral constraints (eliminate motivational problems)
a. Physical: key access
