• Unit 5: Performance Management and Measurement

    In the last unit, you learned about human capital development and training. Mastering and applying this information is crucial to helping you become more effective at identifying and creating a performance management and measurement system. Firms often use performance management systems in order to properly identify the success of their employees.

    "Success” in the workplace is often defined by an individual's ability to live up to the demands of his or her position. With proper job analysis, it should be easy to quantify the level of success or failure that each employee has reached. However, it is important to recognize that all humans are subject to certain biases—leniency and the halo effect are good examples—when asked to provide feedback. (Leniency refers to a manager's tendency to be "too nice” out of fear of hurting the feelings of his or her employee.

    The halo effect refers to a situation in which a manager focuses on one positive aspect of an employee's performance as opposed to the performance as a whole over the evaluation period. The manager might, for example, fixate on the fact that an employee obtained a high-profile client or made a profitable sale, despite poor performance in all other aspects of the job.) Employees should be made aware of such tendencies in order to strive toward a more balanced evaluation process.

    Meanwhile, in a performance appraisal, one employee (frequently a manager) reviews the performance of another employee. Many successful firms (including Infosys, one of the largest IT companies in India) use what are known as "360 degree reviews.” In the 360 degree review, the employee also reviews the manager. Firm managers should explore various types of appraisal systems in order to determine which fits best with the firm's culture and strategy.

    Completing this unit should take you approximately 4 hours.