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2000 by South-Western College Publishing

Human Resource Management, 2/E, Lawrence S. Kleiman

10-1

Chapter 10

Implementing Productivity

Improvement Programs


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10-2

HR Planning

Job Analysis

Recruitment

Selection

Workplace Justice

Unions

Safety & Health

International

Competence

Motivation

Work Attitudes

Output

Retention

Legal Compliance

Company Image

Cost

Leadership

Product

Differentiation

Training/Develop.

Performance App.

Compensation

Productivity Imp.

HRM and Competitive Advantage


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10-3

Productivity Improvement Programs and

Competitive Advantage

Increase

Employee

Motivation

Enhance

RecruitingEfforts

Increase

Productivity

Hire More

ProductiveEmployees

Productivity

Improvement

Programs

Competitive

Advantage


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10-4

Desirable Employee Behaviors

Attend work

regularly

Come to work on

time Work well with

others

Work smart Work hard


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10-5

Types of Rewards

Rewards

Extrinsic Intrinsic

Given by someone else Come from within


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10-6

Expectancy Theory Model

EffortSuccessful

PerformanceValued Extrinsic Reward

Valued Intrinsic Reward

Achievement ofOrganizational

Goals

Perceived

Probability

Perceived

Probability


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10-7

Types of Productivity Improvement

Programs

Productivity Improvement Programs

Pay-for-Performance

Programs

Employee Empowerment

Programs

Extrinsic

Rewards

Intrinsic

Rewards




10-8

Rationale for Pay-for-Performance

Programs

Pay Linkedto

Performance

Top Performers

Rewarded

Low PerformersNot Rewarded

High Levels of

Performance

Maintained

Increase Performance

to Receive Future

Rewards

Leave the Organization




10-9

Standards for Effective Pay-for-

Performance Programs

Effort-performance links Performance-reward links Value of rewards Timeliness of rewards Performance-organizational

mission links Cost efficiency




10-10

Effort--->Performance Links

Clarify what behavior(s) is expected.

Set achievable goals.

Ensure that job performance ismeasured accurately.




10-11

Performance--->Rewards Links

Ensure that rewards are received only if

desired level of performance is

achieved.

Do not allow successful performance to

go unrewarded!!!




10-12

Value of Reward

Sufficient

Important




10-13

Timeliness of Reward

As soon as possible after desired

behavior has occurred




10-14

Performance--->Organizational Mission

Links

Rewarded performance MUST

contribute to the organizations mission.




10-15

Cost Efficiency

Cost of rewards < benefits to

organization




10-16

Merit Pay

Annual pay raises

Based on levels of performance

Performance Pay Raises

High

Low




10-17

Merit Pay Plans

Merit pay guidecharts

Supervisory discretion



Human Resource Management, 2/E, Lawrence S. Kleiman10-18

Merit Pay Guidecharts

Performance Rating (%)

Current Above Below

Pay Quartile Superior Average Average Average

4th 6 4 0 0

3rd 8 6 4 0

2nd 10 8 6 0

1st 12 10 8 0




Why Merit Pay Plans Often Fail

o Poor performance appraisal system

o Unclear performance-reward link

o Rewards arent valued by employeeso Failure to distinguish among employees

o Time lag between behavior and reward

o Not cost efficiento Reward the wrong behaviors




Six Steps to an Effective Merit Pay Plan

Give rewards large enough to make a

difference.

Make pay increases public.

Use bonuses, not salary increases.

Make rewards timely.

Develop an effective performanceappraisal system.

Involve employees in plan design.


21/53 2000 by South-Western College PublishingHuman Resource Management, 2/E, Lawrence S. Kleiman

10-21

Piece Rate Plans

Wages based on number of pieces or

units produced

Work best

manufacturing

jobs simple and highly structured

employees control their own output


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2000 by South-Western College PublishingHuman Resource Management, 2/E, Lawrence S. Kleiman

10-22

Piece Rate Plans

StrengthsStrengths

Clear performance

expectations

Objectiveperformance

standards

Rewards tied directly

to performance

Cost efficient

WeaknessesWeaknesses

May create high job

stress

May encourageundesired and

discourage desired

behaviors that

contribute to

performance-

organizational link


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10-23

Gainsharing Plans

Cash award to employees

for meeting or exceeding

goals based on collaborative

performance of a team ofemployees

Increase Production

orReduce Costs


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10-24

Characteristics of Gainsharing Plans

Productivity goals that can be achieved

through effective teamwork

Employees receive cash bonuses if

goals are met

Productivity measured by an explicit

formula with objective measures

Employees encouraged to help

increase productivity or cut costs


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10-25

Implementing a Scanlon Plan

Production cost criteria?

Means to reduce costs?

Allocation of gains?


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10-26

Scanlon Plans

Calculate the labor cost/production cost

ratio expected in a typical year.

Decide how production costs are to be

cut.

Allocate bonuses: 75% paid out, 25%

held in reserve for lean periods.


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10-27

Where Scanlon Plans Work Best

Manufacturing organizations

Recent adoption in some service

organizations


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10-28

Gainsharing Plans

StrengthsStrengths

Effort-performance

and performance-

reward links strong Performance linked

to organizations

mission

Promote teamwork

Cost effective


High-performing

individuals may feel

cheated Suggestions may

dwindle over time

Inflexible payoutformulas may create

problems


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10-29

How to Make Gainsharing Plans

Succeed

Create a culture of respect,

cooperation, and open communication.

Make payout based on factors

employees can control.

Share information with employees and

gather suggestions.


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10-31

Profit-Sharing vs. Gainsharing Plans

Profit-Sharing Gainsharing

Reward groupperformance

Reward groupperformance

Payout isprofit

Payout is gains from

increased productivity/

decreased costs


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10-32

Profit-Sharing

StrengthsStrengths

Links employees

interests with

employers goals Employees

identify with

organization

internalize goals

work harder


Payouts based on

many factors

outside of employeecontrol

Not always cost

efficient

Not timely


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10-34

Employee Empowerment Programs

Decision

Making

Issues

give

suggestionsmake

decisions

job-

relatedcompany

policy

veto

decisions

working

conditions


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10-35

How Employee Empowerment Programs

Improve Productivity

EmployeeEmpowerment

Programs

Provide

opportunity for

employees to

obtain intrinsicrewards

Improveorganizational

decision making

Improve

Productivity


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10-36

Informal Participative Decision-Making

Managers and

subordinates make

joint decisions on a

day-to-day basis.


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10-37

Informal Participative Decision-Making

StrengthsStrengths

Positive impact on

productivity


Interests of

employees may not

align with those ofemployer

Some employees

dont want to

participate


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10-38

What Makes a Job Intrinsically

Motivating?

Job

Characteristics

skill variety

taskidentify

task

significanceautonomy

jobfeedback


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10-39

Job Enrichment Strategies

Combine tasks.

Establish client relationship.

Reduce direct supervision. Increase identification with

product/service.


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10-40

Job Enrichment

StrengthsStrengths

Often leads to

improvements in

productivity, quality,absenteeism rates,

and retention


Production may

become less

efficient


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10-41

Quality Circles

Six to twelve

employees

Identify and resolve

production problemsin their unit

Meet once a week

Led by a coordinator


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10-42

Quality Circles

StrengthsStrengths

Gain valuable input

from employees

Improvecommunications

among workers and

management

Increase motivation

through

empowerment


Often used as a

quick fix

Creates an insider-outsider culture

Sometimes operated

improperly


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10-44

Self-Managed Work Teams

Six to eighteen

employees

From different

departments Work together

Produce a well-

defined segment of

finished work


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10-45


Plan

Organize

Coordinate

Take corrective action


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10-47

Training for Self-Managed Work Teams

Technical skills

Interpersonal skills

Administrative skills


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10-48


StrengthsStrengths

Empower

employees to make

day-to-day decisions Provide greater

flexibility


Departmental

rivalries when teams

formed Absence of

supervisor may

cause problems


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Li M d I f l


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10-51

Line Managers and Informal

Participation

Match the level ofparticipation to

each employees

desire for

challenge,responsibility, and

opportunity

Match the level ofparticipation to

each employees

KSAs

Li M d S lf M d


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10-52

Line Managers and Self-Managed

Work Teams

Serve as a

technical consultant

to teams

Serve as afacilitator

Serve as an area

manager

Th HRM D d P d i i


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The HRM Department and Productivity

Improvement Programs

Work with top management to

establish an appropriate corporate

culture

Provide training

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