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Summary articles Design of Effective Performance Management Systems

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Technische Universiteit Eindhoven (TUE)

Includes a summary of the following articles: Locke, E.A. & Latham, G.P. (2002). Building a practically useful theory of goal setting and task motivation. American Psychologist, 57, 9, 705-717. DeNisi, A., & Kluger, A. (2000). Feedback effectiveness: Can 360-degree appraisals be improved? Acade...

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1jm21
goal setting theory
promes
strategic context of
design of effective performance management systems
feedback amp performance appraisal
performance management in teams
pay for performance pfp

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Summary Articles 1JM21
Week 1 – Goal-Setting Theory
Locke, E.A. & Latham, G.P. (2002). Building a practically useful theory of goal setting
and task motivation. American Psychologist, 57, 9, 705 -717.

• Ryan (1970) argued that ‘it seems a simple fact that human behaviour is affected by
conscious purposes, plans, intentions, tasks and the like’. These first-level explanatory
concepts were the immediate motivational causes of most human action.
• A goal is the object or aim of an action.
• The focus is on the relationship between conscious performance goals and the level of task
performance rather than on discrete intentions to take specific actions.
Core Findings
• Relationship of goal difficulty to performance: positive linear function in that the highest or
most difficult goals produced the highest levels of effort and performance.
• Effect of specific, difficult goals compared to do one’s best goals: specific difficult goals led to
higher performance than urging people to do their best (have no external referent).
Expectancy and Social-Cognitive Theories
• Valence-instrumentality-expectancy theory: the force to act is a multiplicative combination
of valence (anticipated satisfaction), instrumentality (the belief that performance will lead to
rewards), and expectancy (the belief that effort will lead to the performance needed to
attain the rewards).
• Valence-instrumentality-expectancy: higher expectancies→ higher levels of performance.
• Social-cognitive theory: self-efficacy (task-specific confidence) is measured by getting
efficacy ratings across a whole range of possible performance outcomes rather than from a
single outcome.
• Social-cognitive theory: higher self-efficacy → higher goals set.
Goal Mechanisms
• Goals affect performance through four mechanisms:
o Directive function: goals direct attention and effort toward goal-relevant activities.
o Energising function: shown with tasks that directly entail physical effort, entail
repeated performance of simple cognitive tasks, include measurements of
subjective effort, and include physiological indicators of effort.
o Persistence: when participants are allowed to control the time they spend on a task,
hard goals prolong effort.
o Goals affect action indirectly by leading to the arousal, discovery, and/or use of task-
relevant knowledge and strategies.
Moderators - Goal commitment
• The goal-performance relationship is strongest when people are committed to their goals.
Commitment is most important when goals are difficult.
• Factors facilitating goal commitment:
o Factors that make goal attainment important to people, including the importance of
the outcomes that they expect as a result of working to attain a goal.
o Their belief that they can attain the goal (self-efficacy).
• Convince people that goal attainment is important:
o Making a public commitment to the goal enhances commitment.
o Goal commitment is enhanced by leader communicating an inspiring vision and
behaving supportively.
o Allow subordinates to participate in setting goals.
o If the goal is assigned tersely (‘Do this…’) without explanation, it leads to
performance that is significantly lower than for a participatively set goal.

, o The primary benefit of participation in decision making is cognitive rather than
motivational in that it stimulates information exchange.
o Monetary incentives are one practical outcome that can be used to enhance goal
commitment.
• Self-efficacy enhances goal commitment, and leaders can raise it of their subordinates:
o By ensuring adequate training to increase mastery that provides success
experiences.
o By role modelling or finding models with whom the person can identify.
o Through persuasive communication that expresses confidence that the person can
attain the goal.
Moderators - Feedback
• Summary feedback is a moderator of goal effects in that the combination of goals plus
feedback is more effective than goals alone.
• Control theory also emphasizes the importance of goal setting and feedback for motivation.
• Self-motivation involves a dual cyclic process of disequilibratory discrepancy production
followed by equilibratory reduction.
Moderators – Task Complexity
• As the complexity of the task increases and higher-level skills and strategies have yet to
become automatised, goal effects are dependent on the ability to discover appropriate task
strategies.
• Measures of task strategy often correlate more highly with performance than do measures
of goal difficulty.
• When a specific difficult learning goal, rather than a performance goal was set, consistent
with goal-setting theory, high goals led to significantly higher performance on a complex
task than did the general goal of urging people do their best.
• Do-your-best goals were more effective than distal goals, but when proximal outcome goals
were set in addition to the distal outcome goal, self-efficacy and profits were significantly
higher than in the do-your-best condition or in the condition where only a distal outcome
goal had been set.
• Proximal goals can increase error management.
Personal Goals as Mediators of External Incentives
• Motivation hub: where the action is,
consists of personal goals, including goal
commitment, and self-efficacy. These
variables can mediate the effects of
external incentives.
• Assigned goal effects are mediated by personal or self-set goals, as well as by self-efficacy.
• There is a mediating effect of self-set goals and self-efficacy on monetary incentive effects.
• Self-efficacy is critical when negative summary feedback is given, because the person’s level
of self-efficacy determines whether subsequent goals are raised or lowered.
Satisfaction
• Goals are, at the same time, an object or outcome to aim for and a standard for judging
satisfaction.
• Goals serve as the inflection point/reference standard for satisfaction versus dissatisfaction.
• People with high goals produce more because they are dissatisfied with less.
• People can expect many psychological and practical outcomes from setting and attaining
high set goals.
• Setting specific challenging goals is also a means of enhancing task interest and of helping
people to discover the pleasurable aspects of an activity.
Practical Applications
• Productivity and Cost Improvement: setting a specific difficult goal leads to significant
increases in employee productivity.

, • Performance Appraisal: engineers who set goals for their scores on a behavioural index of
their performance had higher subsequent performance than those who were urged to do
their best.
• Selection: the mean criterion-related validity of the situational interview is higher than that
of all other selection interviews.
• Self-Regulation at Work: a key variable in self-regulation is goal setting. Training in self-
regulation enables employees to cope effectively with personal and social obstacles to their
job attendance, and also increased their self-efficacy because they could exercise influence
over their behaviour.
o Mental practice is symbolic guided rehearsal of a task in the absence of any physical
involvement.
o In the high-performance cycle, high satisfaction is the result, not the cause, of high
performance when rewards are commensurate with performance. The subsequent
effect of satisfaction on action is therefore indirect rather than direct.
New Directions and Limitations – Goal Conflict
• Goal conflict undermines performance if it motivates incompatible action tendencies.
• When specific, difficult goals of the person are aligned with the group’s goal of maximising
performance, the group’s performance is enhanced.
New Directions and Limitations – Learning and Performance Goals
• On tasks that are complex for people, learning goals can be superior to performance goals.
New Directions and Limitations – Goals and Risk
• Prospect theory emphasizes reference points, as does goal theory, but it does not
incorporate the concept of aspiration level.
• Difficult performance goals increased the riskiness of the strategies participants chose to use
in a computer game and improved performance.
New Directions and Limitations - Personality
• Goals, along with self-efficacy, mediate the effect of personality measures on work
performance.
• The second issue involved is whether goals are better predictors of action than traits. If goals
mediate personality effects, then the former should predict better than the latter.
• Assigned goals neutralise goal orientation effects.
New Directions and Limitations – Goals and Subconscious Motivation
• Need for achievement had no concurrent or longitudinal relationship with a firm’s
performance and no relationship to entrepreneur-set goals.
• The first-level explanation of motivation, namely, conscious goal setting, may be more
reliably and directly tied to action than are second level-explanations. Second, the conscious
and subconscious aspects of achievement motivation are unrelated.
• The lack of focus on the subconscious is a limitation of goal-setting theory.
• Goal-setting theory states that, irrespective of the subconscious, conscious motivation
affects performance and job satisfaction. This is
especially true for people who choose to be purposeful
and proactive.
Conclusion
• The focus on goal-setting theory is on the core
properties of an effective goal. These properties are:
specificity and difficulty level; goal effects at the
individual, group, and organisation level; the proper
use of learning versus performance goals; moderators
of goal effects; the role of goals as mediators of other
incentives; and the effect of goal source.
• Social-cognitive theory are focused on self-efficacy, its measurement, its causes, and its
consequences at the individual, group, and societal levels in numerous domains.

, • The effects of goal setting are very reliable, failures to replicate them are due to errors.
• In short, goal-setting theory is among the most valid and practical theories of employee
motivation in organisational psychology.

Week 2 – Feedback Intervention & Performance Appraisal / ProMES
DeNisi, A., & Kluger, A. (2000). Feedback effectiveness: Can 360-degree appraisals be
improved? Academy of Management Executive, 14 (1), 129-139

• When employees do not receive feedback from their job, they will seek it on their own.
• Most decision-making models, and many motivational models, include a feedback loop to
indicate that individuals learn from the outcomes of their decisions or behaviour.
Does Feedback Work?
• Ammons had been very positive about feedback in his review (knowledge of results (KR) or
knowledge of performance (KP), and he concluded that feedback increased both learning
and motivation. He ignored the findings that contracted these conclusions.
• The positive effects of feedback on performance became one of the most widely accepted
principles in psychology.
• The results of the meta-analysis indicated a modest, but positive effect of feedback on
performance overall, but 38 percent of the feedback effects were actually negative.
• Moderators: the conditions that make feedback most or least effective.
• The sign of the feedback was not an important moderator of feedback effectiveness. The
negative effects of feedback interventions could not be traced back to receiving negative as
opposed to positive feedback.
• Does feedback work?: usually, but not always. Furthermore, under some conditions,
feedback appeared to actually lower subsequent performance.
How Does Feedback Operate?
• Feedback intervention theory – assumptions:
o Behaviour is regulated by a comparison of feedback with a goal or standard → when
we notice a gap between feedback and some goal, we act to reduce that gap.
o Goals or standards are arranged hierarchically →
▪ The highest level refers to meta-task processes, or a self-level, where goals
relate to our self-concept. At this level, it is unlikely that the person will
abandon the goal or standard, but concern over reasserting or defending
one’s self-image could interfere with the ability to focus on the task itself
and improve performance.
▪ The next level is the task motivation, or task level, and the goals at this level
are related to actual task performance. Feedback interventions at this level
are most likely to produce the desired effect of feedback on motivation and,
subsequently, on performance.
▪ The task learning level is the lowest level of attention, and includes goals
related to the details, or actual actions involved in performing the task at
hand.
o Attention is limited, so only those feedback-standard gaps that receive attention will
regulate behaviour.
o Attention is normally directed to a moderate level in the hierarchy.
o Feedback interventions change the locus of attention and so affect behaviour.
• The major point to feedback intervention theory is that the effectiveness of any feedback
intervention depends on the level at which the intervention focuses our attention.
At Which Level of Attention Should We Focus Feedback Interventions?
• When our attention is focused on the task level, we are concerned about shrinking the gap
between actual performance and performance goals.

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