Ch07, Appraising and Rewarding Performance

5/20/2018 Ch07, Appraising and Rewarding Performance

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Chapter 7

Rewards and PerformanceManagement

What gets measured

happens


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Copyright 2008 John Wiley & Sons, Inc. 7-2

Chapter 7 study questions

What is the link between motivation and

rewards?

What is performance management?What are common performance appraisal

alternatives?


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Figure 7.1


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What is the link between

motivation and rewards?

Intrinsic rewards

positively valued work outcomes that the

individual receives directly as a result of task

performance

Extrinsic rewards

positively valued work outcomes that are given

to an individual or group by some other personor source in the work setting


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Merit pay

compensation system that directly ties an

individuals salary or wage increase to

measures of performance accomplishments

during a specific time period

should create a belief among employees that

the way to achieve high pay is to perform athigh levels


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Gain sharing

gives workers the opportunity to earn more by

receiving shares of any productivity gains that

they help to create


7/31Copyright 2008 John Wiley & Sons, Inc. 7-7



Profit-sharing plans

reward employees based on overall

organizational profit

Criticism is that organizational profits are

not always a direct result of employees

efforts





Employee stock ownership plans

(ESOPs)

may give stock to employees, or allow stock to

be purchased by them at a price below market

value





Bonuses

the awarding of cash bonuses, or extra pay for

performance that meets certain benchmarks or

that is above expectations

common practice for many employers





Lump-sum increase

allows someone to elect the option of receiving

all of an annual increase in one or more lump-

sum payments





Skill-based pay

rewards people for acquiring and developing

job relevant skills





Pay as benefits

Fringe benefits often add 10 to 40 % to a

persons salary

Flexible benefit plans

allow workers to select benefits according to

needs



Figure 7.2



What is performance

management?

Performance management

process of managing performance

measurement and the various human resource

management decisions and actions based on

such measurement



What is performance

management?

Steps in performance management

1. Identify and set clear and measurableperformance goals

2. Take performance measurements tomonitor goal progress

3. Provide feedback and coaching on

performance results4. Use performance assessment for human

resource management decisions



What is performance

management?

From an evaluative perspective,

performance measurement lets people

know where they stand relative to

objectives and standards



What is performance

management?

From a counseling perspective,

performance measurement facilitates

decisions relating to planning for and

gaining commitment to the continued

training and personal development of

workers



What is performance

management?

Performance Measurement Criteria and

Standards

Output measures assess actual work results

Activity measures

assess work efforts or inputs



What are common performance

appraisal alternatives?

Performance appraisal

formal procedure for measuring and

documenting a persons work performance





Comparative methods of performanceappraisal

Ranking

Raters rank order people from best to worst

Paired comparisons Raters compare each person with every other

person

Forced distribution Raters place a specific proportion of employees into

each performance category





Absolute methods of performance appraisal

Graphic rating scales

Raters assign scores on a list of dimensions related

to high performance outcomes in a given job

Critical incident diary records

Rater records incidents of unusual success or failure

in a given performance aspect

Behaviorally anchored rating scales (BARS)

Rater identifies observable job behaviors



Figure 7.3



Figure 7.4


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Self evaluation

individual rates himself or herself

Peer evaluations persons in the work team or doing similar jobs

rate the individual as a co-worker


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360Evaluation

using not only the evaluations of bosses, peers,

and subordinates, but also self-ratings,

customer ratings, and ratings by others withwhom the ratee deals outside the immediate

work unit


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Group Performance Evaluation System

Link the teams results to organizational goals

Start with the teams customers and the team

work process needed to satisfy those needs:

customer requirements, delivery and quality,

waste and cycle time

Evaluate team and each individual membersperformance

Train the team to develop its own measures


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To be meaningful, an appraisal system

must be:

Reliable - provide consistent results across

time

Valid - actually measure people on relevant job

content


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Measurement errors in performance

appraisal

Halo errors

Raters evaluate on several different dimensions and

give a similar rating for each dimension

Leniency errors

Raters tend to give everyone relatively high ratings Strictness errors

Raters tend to give everyone relatively low ratings


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Measurement errors in performance

appraisal

Central tendency errors

Raters lump everyone together around the average

or middle

Low differentiation errors

Raters restrict themselves to a small part of therating scale


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Measurement errors in performanceappraisal

Recency errors

Raters allow recent events to exercise undueinfluence on ratings

Personal bias errors Raters let personal biases, such as stereotypes,

unduly influence the ratings Cultural bias errors

Raters allow cultural differences of employees toinfluence the performance appraisal


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Steps for improving performance appraisals

1. Train raters to understand the evaluationprocess and recognize errors

2. Ensure that raters observe ratees on anongoing basis

3. Do not have the rater evaluate too manyratees

4. Make sure that the performance dimensionsand standards are stated clearly

5. Avoiding terms that have different meaningsfor different raters

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Ch07, Appraising and Rewarding Performance