HRM 7600 Module 6 Redesigning Performance Management Example

Eighty-One Percent Above Average: Rebuilding Performance Management at an Engineering Firm

Student Name

Master of Business Administration, Thomas Edison State University

HRM-7600: Human Resource Management - Talent Management

Mentor Name

Month Day, Year

Eighty-One Percent Above Average: Rebuilding Performance Management at an Engineering Firm

Performance appraisal, as the course text defines it (DeNisi & Griffin, 2020), is the specific process of evaluating an employee's work, while performance management is the broader system of setting goals, giving feedback, developing people and linking results to rewards. Many organizations do the first and neglect the second. This paper evaluates the system at Buckeye Civil Partners, a composite engineering firm in Ohio with 680 employees who design roads, bridges and water systems, and recommends a redesign.

The Current System

Every January, managers rate each employee on a five-point scale across eight competencies and an overall score, then hold a review meeting. Raises are set from the overall score. The process has three visible problems. Ratings are inflated: 81 percent of employees received a 4 or 5 last year, which leaves the scale unable to distinguish strong from average performance. Managers spend about 14 hours each on forms and meetings for their teams, yet in an internal survey only 29 percent of employees said their review helped them improve. And because raises follow ratings, review meetings turn into negotiations about pay rather than conversations about work.

What the Research Says

DeNisi and Murphy (2017), reviewing a century of research on appraisal, conclude that long efforts to perfect rating scales and train raters bought little added accuracy, and that attention has shifted toward how appraisal fits within performance management and how employees react to it. Pulakos and O'Leary (2011) contend that many firms get performance management wrong by perfecting the yearly forms and neglecting the daily conversations where a manager clarifies what good work looks like, comments on it and removes obstacles.

Giving feedback does not guarantee improvement. Across hundreds of comparisons, Kluger and DeNisi (1996) found that feedback raised performance on average, yet in over a third of cases performance fell afterward, most often when the message pulled attention toward the recipient's self-image and away from the work. An annual meeting focused on a numerical rating and a raise is close to the kind of feedback that research warns against.

Diagnosis

Measured against the text and research, Buckeye's system fails at three of the purposes DeNisi and Griffin (2020) assign to performance management.

The root problem is that one annual event is asked to do too much: judge, reward, document and develop at the same time, with incentives that push managers toward generous ratings.

Recommendation

Buckeye should separate the developmental and administrative purposes and move feedback closer to the work.

First, replace the annual review with quarterly check-ins of about thirty minutes, built around three questions: what is going well on current projects, what is getting in the way, and what the employee should focus on next. Project managers, who see engineers' work most closely, should contribute brief notes at the end of each project. Second, set pay through a separate annual calibration in which managers in each discipline compare their people together, using project results, client feedback and technical milestones such as licensure, and agree on raise recommendations within a budget. Third, train managers in task-focused feedback and coaching, drawing on the finding that feedback aimed at the work helps while feedback aimed at the person often harms. The firm should keep a simple year-end record for documentation. A short summary of the four check-ins, signed by employee and manager, gives the legal record the old form provided without driving the conversation, and it supports promotion decisions when they arise.

The trade-off is that managers will spend time differently and perhaps more of it: four short conversations and a calibration session in place of one long form. Employees lose the clarity of a single number, and some will worry that pay decisions made in calibration are less transparent. The firm should publish how calibration works and what evidence it uses, and track whether raises differ meaningfully by contribution.

Measures

Within a year, the share of employees who say feedback helps them improve should rise above 60 percent, check-in completion should exceed 90 percent each quarter, and raise differences between top contributors and others should be visible in pay data. Voluntary turnover among engineers rated as top contributors in calibration should also be watched.

Conclusion

Buckeye's annual appraisal consumes managers' time, inflates ratings and rarely improves performance. Research suggests that the problem lies less in the rating form than in relying on one event to do everything. Frequent, task-focused conversations, with pay decided separately through calibration, would turn appraisal into performance management.

References

DeNisi, A. S., & Griffin, R. W. (2020). HR (5th ed.). Cengage Learning.

DeNisi, A. S., & Murphy, K. R. (2017). Performance appraisal and performance management: 100 years of progress? Journal of Applied Psychology, 102(3), 421-433. https://doi.org/10.1037/apl0000085

Kluger, A. N., & DeNisi, A. (1996). The effects of feedback interventions on performance: A historical review, a meta-analysis, and a preliminary feedback intervention theory. Psychological Bulletin, 119(2), 254-284. https://doi.org/10.1037/0033-2909.119.2.254

Pulakos, E. D., & O'Leary, R. S. (2011). Why is performance management broken? Industrial and Organizational Psychology, 4(2), 146-164. https://doi.org/10.1111/j.1754-9434.2011.01315.x