Chapter 7 Rewards and Performance Management What gets measured happens

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Chapter 7 Rewards and Performance Management What gets measured happens Slide 2 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? Slide 3 Copyright 2008 John Wiley & Sons, Inc.7-3 Figure 7.1 Slide 4 Copyright 2008 John Wiley & Sons, Inc.7-4 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 person or source in the work setting Slide 5 Copyright 2008 John Wiley & Sons, Inc.7-5 What is the link between motivation and rewards? 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 at high levels Slide 6 Copyright 2008 John Wiley & Sons, Inc.7-6 What is the link between motivation and rewards? Gain sharing gives workers the opportunity to earn more by receiving shares of any productivity gains that they help to create Slide 7 Copyright 2008 John Wiley & Sons, Inc.7-7 What is the link between motivation and rewards? Profit-sharing plans reward employees based on overall organizational profit Criticism is that organizational profits are not always a direct result of employees efforts Slide 8 Copyright 2008 John Wiley & Sons, Inc.7-8 What is the link between motivation and rewards? Employee stock ownership plans (ESOPs) may give stock to employees, or allow stock to be purchased by them at a price below market value Slide 9 Copyright 2008 John Wiley & Sons, Inc.7-9 What is the link between motivation and rewards? 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 Slide 10 Copyright 2008 John Wiley & Sons, Inc.7-10 What is the link between motivation and rewards? Lump-sum increase allows someone to elect the option of receiving all of an annual increase in one or more lump- sum payments Slide 11 Copyright 2008 John Wiley & Sons, Inc.7-11 What is the link between motivation and rewards? Skill-based pay rewards people for acquiring and developing job relevant skills Slide 12 Copyright 2008 John Wiley & Sons, Inc.7-12 What is the link between motivation and rewards? 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 Slide 13 Copyright 2008 John Wiley & Sons, Inc.7-13 Figure 7.2 Slide 14 Copyright 2008 John Wiley & Sons, Inc.7-14 What is performance management? Performance management process of managing performance measurement and the various human resource management decisions and actions based on such measurement Slide 15 Copyright 2008 John Wiley & Sons, Inc.7-15 What is performance management? Steps in performance management 1.Identify and set clear and measurable performance goals 2.Take performance measurements to monitor goal progress 3.Provide feedback and coaching on performance results 4.Use performance assessment for human resource management decisions Slide 16 Copyright 2008 John Wiley & Sons, Inc.7-16 What is performance management? From an evaluative perspective, performance measurement lets people know where they stand relative to objectives and standards Slide 17 Copyright 2008 John Wiley & Sons, Inc.7-17 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 Slide 18 Copyright 2008 John Wiley & Sons, Inc.7-18 What is performance management? Performance Measurement Criteria and Standards Output measures assess actual work results Activity measures assess work efforts or inputs Slide 19 Copyright 2008 John Wiley & Sons, Inc.7-19 What are common performance appraisal alternatives? Performance appraisal formal procedure for measuring and documenting a persons work performance Slide 20 Copyright 2008 John Wiley & Sons, Inc.7-20 What are common performance appraisal alternatives? Comparative methods of performance appraisal 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 Slide 21 Copyright 2008 John Wiley & Sons, Inc.7-21 What are common performance appraisal alternatives? 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 Slide 22 Copyright 2008 John Wiley & Sons, Inc.7-22 Figure 7.3 Slide 23 Copyright 2008 John Wiley & Sons, Inc.7-23 Figure 7.4 Slide 24 Copyright 2008 John Wiley & Sons, Inc.7-24 What are common performance appraisal alternatives? 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 Slide 25 Copyright 2008 John Wiley & Sons, Inc.7-25 What are common performance appraisal alternatives? 360 Evaluation using not only the evaluations of bosses, peers, and subordinates, but also self-ratings, customer ratings, and ratings by others with whom the ratee deals outside the immediate work unit Slide 26 Copyright 2008 John Wiley & Sons, Inc.7-26 What are common performance appraisal alternatives? 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 members performance Train the team to develop its own measures Slide 27 Copyright 2008 John Wiley & Sons, Inc.7-27 What are common performance appraisal alternatives? To be meaningful, an appraisal system must be: Reliable - provide consistent results across time Valid - actually measure people on relevant job content Slide 28 Copyright 2008 John Wiley & Sons, Inc.7-28 What are common performance appraisal alternatives? 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 Slide 29 Copyright 2008 John Wiley & Sons, Inc.7-29 What are common performance appraisal alternatives? 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 the rating scale Slide 30 Copyright 2008 John Wiley & Sons, Inc.7-30 What are common performance appraisal alternatives? Measurement errors in performance appraisal Recency errors Raters allow recent events to exercise undue influence 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 to influence the performance appraisal Slide 31 Copyright 2008 John Wiley & Sons, Inc.7-31 What are common performance appraisal alternatives? Steps for improving performance appraisals 1.Train raters to understand the evaluation process and recognize errors 2.Ensure that raters observe ratees on an ongoing basis 3.Do not have the rater evaluate too many ratees 4.Make sure that the performance dimensions and standards are stated clearly 5.Avoiding terms that have different meanings for different raters