MGMT90015 · Foundations Of Human Resource Management
Performance Management
Performance management is built around a single examinable tension. The performance-management cycle — plan, monitor, develop, review, reward — serves two purposes that pull apart: control (judging and rating people for pay and promotion) versus development (coaching them to improve). Trying to do both in one appraisal conversation undermines the honest dialogue development needs — naming this control-vs-development tension is the chapter's core analytical move. From there: SMART goals (specific, measurable, achievable, relevant, time-bound) focus effort, but the same measurability that motivates can backfire into gaming — people optimise the metric, not the goal (the word 'gaming' is what the marker rewards). The chapter covers rater errors (halo, leniency, central tendency, recency) and 360-degree feedback as a partial remedy, then the appraisal interview and the Flag–Example–Benefit (F–E–B) structure for delivering feedback that changes behaviour. A recurring pivot for scenario answers: is a broken appraisal a design problem or an implementation problem?
What this chapter covers
- 01The performance-management cycle — plan, monitor, develop, review, reward
- 02The control vs development tension at the heart of appraisal
- 03SMART goals — focusing effort
- 04How SMART goals backfire into gaming
- 05Rater errors — halo, leniency, central tendency, recency
- 06360-degree feedback as a partial remedy
- 07The appraisal interview and Flag–Example–Benefit feedback
- 08The 'design or implementation?' diagnostic pivot
Critiquing a flawed appraisal system — mark by mark
- +1Name the core tension: the system fuses control (bonus-linked rating) with development — define both — so honest coaching is crowded out by the stakes of the rating.
- +1Diagnose the goal: a single bonus-linked sales target invites gaming — staff optimise the measured number (e.g. discounting to hit volume) at the expense of the real objective.
- +1Name the rater error: everyone scored 'meets expectations' is central-tendency error, which destroys the system's ability to discriminate performance.
- +1Apply the design-vs-implementation pivot: some faults are design (one metric, fused purposes) and some are implementation (managers avoiding hard ratings) — separating them shows analytical depth.
- +1Recommend and conclude: separate developmental from evaluative conversations, broaden the measures, add 360-degree input and rater training, and use Flag–Example–Benefit feedback — concluding with a clear position on what to fix first.
Key terms
- Performance-management cycle
- The ongoing loop of planning goals, monitoring progress, developing the person, reviewing performance and linking it to reward. It frames appraisal as a continuous system rather than a once-a-year event.
- Control vs development tension
- The conflict between appraisal's two purposes: control (evaluating and rating people for pay and promotion) and development (coaching them to improve). Combining both in one conversation undermines the candour development needs, which is the chapter's central analytical point.
- SMART goals (and gaming)
- Goals that are Specific, Measurable, Achievable, Relevant and Time-bound. They focus effort, but the same measurability can backfire into gaming — people optimise the metric rather than the underlying objective — especially when goals carry high stakes.
- Rater errors
- Systematic distortions in how appraisers score people: halo (one trait colours all), leniency or severity, central tendency (everyone rated average) and recency (recent events dominate). They threaten the reliability of appraisal and are partly addressed by rater training and 360-degree feedback.
- 360-degree feedback
- Gathering performance feedback from multiple sources — manager, peers, subordinates, sometimes customers — rather than the manager alone. It broadens the evidence base and reduces single-rater bias, but adds cost and complexity and needs careful handling.
Performance Management FAQ
What is the central tension in performance management?
Control versus development: appraisal is asked both to judge people (for pay and promotion) and to develop them (through honest coaching), and the two pull apart because high-stakes rating discourages the candour development needs. Naming this tension is the chapter's core analytical move and earns the analysis marks.
How do SMART goals backfire?
The measurability that makes a goal motivating also makes it gameable: when a measured target carries high stakes, people optimise the number rather than the real objective — for example, hitting a sales volume by discounting. The exam rewards the word 'gaming' for this unintended consequence.
What are rater errors and how are they fixed?
Rater errors are systematic scoring distortions — halo, leniency, central tendency, recency — that undermine appraisal reliability. Remedies include rater training, behaviourally anchored rating scales, and 360-degree feedback to broaden the evidence beyond a single biased rater.
What is the 'design or implementation' pivot?
A diagnostic move for scenario answers: when an appraisal system fails, ask whether the fault is in its design (fused purposes, a single metric) or its implementation (managers avoiding hard ratings). Separating the two shows depth and leads to a sharper, more targeted recommendation.
Exam move
Build every performance answer on the control-vs-development tension — it is the chapter's reliable analytical spine. Memorise SMART plus its gaming failure mode (use the word 'gaming'), the four rater errors and 360 as a remedy, and the design-vs-implementation pivot for diagnosing broken systems. Keep one worked appraisal critique ready to adapt, and always close with a clear recommendation on what to fix first.
