MHSA 7650 – Human Resources Management in Health Care Performance Management
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Introduction to Performance Management **
Beyond the initial acquisition of human resources within organizational settings, the primary goal of HRM shifts to the need to retain adequate human resources over the long term. A number of principles and practices of HRM are employed for the purpose of retention of critical human resource including the effective application of performance appraisal and management methods and strategies.
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The link between performance appraisal and management strategies and the effective retention of human resources within the organizational setting is based on the premise that, when effectively applied based on best practices information, performance appraisal/management strategies and methods serve, among other things, as a motivational tool that managers use to sufficiently motivate their subordinates to want to stay within the organization.
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Much literature to date points to a fairly clear association between effective performance management strategies at the organizational level, measured in various ways, and successful efforts at retention of critical human resources – those organizations that were evaluated as having more highly developed performance management systems were also shown to have higher HR retention rates across the board.
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Understanding the importance of effective performance management as an employee motivational tool requires a background understanding of the more commonly utilized theories of human/worker motivation that have been developed over the last 50-75 years.
Worker Motivation – Theories and Applications **
Motivation is defined as the collective rationale/stimulus for worker behavior/performance.
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As it relates to the workplace, there are a number of relevant domains of worker motivation to consider: ** ** ** ** **
Worker motivation to enter the organization Worker motivation to stay with the organization Worker motivation to come to work regularly and punctually Worker motivation to perform at an individually optimal level Worker motivation to maintain appropriate civic responsibility
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Motivation may be conceptualized as a process by which individuals satisfy unmet needs, which typically results in workers exhibiting goaldirected behaviors that allow the HSO to function optimally.
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Personal motivation is influenced by both internal as well as external factors/sources. It is the manager’s responsibility to understand those factors/sources of worker motivation and to use that knowledge for the purpose of enhancing individual worker performance.
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Current understanding/conceptualization of worker motivation has changed dramatically over time, with a general evolution of management away from an authoritarian view of worker behavior (Theory X) towards a more integrative/participative view of worker behavior (Theories Y/Z), which views workers as generally motivated to do good work.
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Theories of Motivation **
Maslow’s Hierarchy of Needs: workers satisfy their various needs (physiological, safety, etc.) in a satisfaction-progession manner from lower level to higher level needs. First content theory of motivation developed to ID different “needs” as motivational.
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Alderfer’s ERG Theory: another content motivational theory; identified three essential levels of needs, allowed for an alternative pathway (frustration-regression) for worker motivation attainment. (cycling between needs)
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Herzberg’s Theory: content theory of motivation also commonly known as “two factor theory”; satisfiers and dissatisfiers contribute to overall worker motivation; first theory to draw distinction between different motivational factors in terms of inherent ability of each to motivate/de-motivate.
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Vroom’s Expectancy Theory: first process theory of motivation focusing on external sources of motivation (non-individual specific) in the workplace. Conceptualized worker motivation as the product of (1) work expectancy (work will lead to desired performance); (2) work instrumentality (performance will lead to desired outcome); and (3) individual valuation of the outcome of work performance.
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Locke’s Goal Setting Theory: another process theory of motivation which emphasizes the establishment of worker goals (a priori) upon which ultimate performance is evaluated as being a source of worker motivation. (e.g. MBO method)
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Skinner’s Reinforcement Theory: process theory of motivation that emphasizes classical feedback approaches to worker motivation.
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The application of any one theory is likely insufficient to allow any manager to develop a comprehensive (and valid) understanding of the internal (individual-specific) and external (job-specific) sources worker motivation for the purpose of enhancing worker motivation on the job. It’s more likely that a number of these theories will need to be considered simultaneously to arrive at a more accurate understanding of worker motivational issues in a given setting.
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The underlying challenge of developing a more complete understanding of worker motivation is further complicated in most HSO’s settings as a direct result of the tremendous diversity that exists among different types of workers within many HSO’s (e.g. educational differences, ethnic differences, economic differences, etc.). The most likely result of such diversity is that motivational strategies for one group (based on one or more of the theories) may not be suitable for use in any other group.
Performance Management Systems **
A performance management system (PMS) describes any organizational initiative to monitor, measure, report, improve, and reward employee performance.
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Formal PMS initiatives have been widely adopted across industries and organizations over the last 30-50 years. Many factors, most of them related to increased levels of competition in most markets, have led to the adoption of PMS initiatives as a means to continuously improve worker performance over time so as to accomplish organizational strategic goals.
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The contemporary basis for PMS initiatives as a means of measuring, monitoring, and improving worker performance is constrained by the presence of a number of laws and regulations that pertain to such worker evaluations.
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In general, anti-discrimination laws such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, as well as judicial common law precedents established over the last 30 years (e.g. Griggs vs. Duke Power Co.) requires that all employee performance evaluation processes and criteria strictly adhere to a non-discriminatory standard and otherwise relate solely to work-based issues, with the burden of proof for establishing the job-relatedness of explicit performance criteria residing with the employer.
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Other areas of labor law will also have an impact on organizational performance management initiatives, especially as it relates to the evaluation of performance for those employees who belong to a collective bargaining unit/group (union). As will be seen later, such efforts are heavily proscribed as part of the collective bargaining process.
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Contemporary PMS initiatives are thoroughly integrated with a number of other important HRM functions including:
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Job analysis process – PMS data can identify need to re-design/reanalyze jobs/positions; job analysis provides necessary job description information for the development of performance criteria for PMS.
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Recruitment and selection processes – PMS data allows for evaluation of effectiveness of various recruitment and selection processes.
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Training and development processes – PMS data should allow for identification of “gaps” in employee performance where organizational training/development can be targeted. PMS data can also be used for purposes of evaluating the effectiveness of various training/development efforts.
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Compensation – PMS data are increasingly being integrated into organizational compensation systems as a means of rewarding exemplary work performance based on merit.
The primary goals of PMS may be described as follows: 1.
Provide employees with opportunities to discuss performance and performance standards with their supervisors.
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Provide managers a mechanism for identifying employee strengths and weaknesses. (administrative/developmental goal of PMS)
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Provide a mechanism for managers to facilitate the improvement of employee performance. (developmental goal of PMS)
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Provide a structural basis for HRM decision-making regarding employee compensation, promotion, and termination (administrative goal of PMS)
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Provide a means for complying with various regulatory requirements as it relates to worker performance evaluations. (JCAHO, EEOC, ADA, NLRA – administrative goal of PMS.)
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Performance Appraisal Issues and Methods **
A performance appraisal involves a formal system of periodic review and evaluation of an individual’s (or team’s) work performance against prescribed performance standards.
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The employee performance appraisal process necessarily forms the backbone of any organizational PMS initiative. The vast majority of data collected as part of the PMS process is collected on employee-specific work performance with respect to any/all of the following: >> >> >>
Worker traits/skills Worker behaviors/attitudes Work-based results/outcomes
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Worker appraisals are essentially a form of evaluation, where worker “performance” on a defined set of work performance criteria is compared to some standard/criterion-referenced norm for purposes of evaluating the worker’s level of performance/
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Performance Appraisal Criteria (PAC) represent those measurable standards against which an employee’s performance is being compared. Most commonly, such standards are derived directly from the job analysis and description, and are legally required to be completely job-related and relevant to the needs of the organization.
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Characteristics of “Good” PAC’s: 1. 2. 3. 4. 5.
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Strategic relevance to the organization as a whole Content validity (lack of criterion deficiency) Under direct control of employees to affect/change Reliability in measurement Validity in measurement (construct)
The most commonly utilized methods of conducting employee performance appraisals include the following: 1. 2. 3. 4. 5.
Employee self-appraisal (combined with #2) Supervisory appraisal Peer/staff appraisal Team-based appraisal “360 degree”/multi-tiered appraisals
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Different organizations will make use of some/all of these different approaches to conducting employee performance appraisals based on organizational structure, culture, & intended use/goal(s) of such information (administrative vs. developmental vs. motivational).
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Common Employee Performance Appraisal Formats: >>
Rating scales – assign employees “points” based on how well/poorly they are observed to “perform” with respect to a specific PAC, especially those PAC that are related to a specific trait/skill or behavior/attitude. Advantages include simple/intuitive to utilize, fairly low resource consumption. Disadvantages relate to lack of specificity/detail in many cases and inability to weight certain PAC’s according to importance.
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Behavioral-referenced rating scales -- similar to generic rating scale approach to performance appraisal except that specific behavioral descriptions are included for each scale level/increment for purposes of increasing specificity. Primary disadvantage related to level of effort/resources required to implement.
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Behavioral observation scales -- identification of desirable performance-related behaviors and rating based on frequency of their observation/occurrence. Similar advantages and disadvantages to behavioral-referenced rating scales.
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Critical incidents approach -- supervisor keeps a detailed record of desirable and undesirable incidents associated with an employee's performance. Advantageous in that it provides the most explicit level of detail of worker performance of all methods described. Disadvantageous in that it requires a substantial level of managerial commitment to directly observe employees.
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Management by objectives approach -- prospective approach to performance appraisal/management based largely on Locke's Goal Setting Theory of employee motivation, discussed above. Such an approach requires that employees and their supervisors identify appropriate work performance goals for a given period upon which future performance appraisals will be largely based. Requires a significant amount of management involvement as it relates to goal establishment, coaching, and feedback.
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Obstacles to Effective Performance Appraisals **
A number of methodological and socio-behavioral phenomena can significantly complicate or otherwise reduce the effectiveness of organizational efforts to evaluate employee work performance. >>
Emotional predominance -- despite management's best efforts to reduce such performance appraisals to completely objective exercises to improve worker (and organizational) performance, the intensely personal nature of such initiatives (i.e. persons who work together as colleagues/coworkers on a daily basis are asked to sit in judgement of one or the other or each other) makes it almost impossible to completely purge the emotional aspect from the process.
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As a result of the above, it is typically the case that a manager will, consciously or sub-consciously, provide a biased rating of employee performance, especially so in cases where the supervisor has little in the way of objective data/evidence to support such appraisals. In such cases, emotional issues tend to predominate.
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Rating errors -- when one or more different rating scales are utilized as part of the employee evaluation/performance appraisal process, either/both systematic sources of error (bias) and/or non-systematic sources of error can be introduced into the process.
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Sources of systematic error/bias -- leniency bias (rating a worker too leniently on one or more PAC's), strictness bias (rating a worker too strictly on one or more PAC's), central tendency bias (rating all workers around some average value for all PAC's), Halo effect, personal bias, contrast bias.
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Sources of non-systematic errors -- random errors of measurement due primarily to poorly developed or otherwise vague PAC's and/or insufficient levels of observation of worker performance.
Political issues -- involves many of the same emotional issues described above related to the interpersonal nature of the employee-supervisor relationship and the presumed effects of poor relations (due to a negative appraisal) on worker productivity, team dynamics, etc. Most often leads to upward bias in performance appraisals.
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Keys to Successful Performance Appraisals/PMS **
Among other keys to successful implementation of PMS initiatives, the need for sufficient performance appraisal/PMS infrastructure is critical. Such infrastructure needs include, at a minimum, the availability of valid/reliable methods for conducting performance appraisals and the provision of adequate organizational training and support to support such systems.
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Aside from infrastructure issues, a number of procedural as well as philosophical issues are important as well to the successful implementation of PMS initiatives including: >>
Provision of timely/continuous performance feedback, in a generally non-threatening manner, to those employees whose performance is being evaluated.
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Adequate managerial preparation for conducting performance appraisals, taking into consideration things such as source(s) of data, anticipated employee reaction(s), strategy for presenting the results of the appraisal, strategy for planning to improve worker performance, etc.
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Sufficient opportunities provided for employees to contribute input to the performance appraisal process. (e.g. employee input into performance problem solving).
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Focusing the appraisal on strategies the employee can adopt to improve future work performance rather than placing too much emphasis on past performance. (CQI focus)
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Focus on improving work performance and de-emphasize personal or otherwise non-work-related factors as part of the appraisal process.
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Emphasize the use of positive reinforcement techniques where exemplary performances are identified/rewarded.
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Strong, consistent organizational support provided for the development of effective PMS initiatives.
