HUMAN RESOURCES PSYCHOLOGY

(PSY 209)

MR MASEKO M.M

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INDUSTRIAL-ORGANISATIONAL PSYCHOLOGY

INTRODUCTION AND OVERVIEW

I/O Psychology is a field of specialisation in psychology. Riggio (2001) defined it as

the scientific study of people within their work environment, which includes the

application of psychological principles, theory and research to the work setting.

Guion (1965) defined it as the scientific study of the relationship between man and

the world of work: the study of the adjustment people make to the places they got o,

the people they meet and the things they do in the process of making a living.

Blum and Naylor (1968) define it as simply the application or extension of

psychology facts and principles to the problems concerning human beings operating

within the context of business and industry.

Within the American Psychology Association (APA), its interests are represented

primarily by the Society for Industrial and Organisational Psychology (SIOP) Division

14 of the APA. It publishes the Journal for I/O Psychology.

In Zimbabwe, it is represented in the Zimbabwe Psychological Association

Registration category for Occupational Psychology.

I/O Psychology has 2 objectives:

1. To conduct research in an effort to increase knowledge and understanding of

human work behaviour.

2. To apply that knowledge to improve work behaviour, the work environment,

and the psychological condition of workers.

I/O Psychologists are therefore trained to be both scientists and practitioners in what

is referred to as the scientist-practitioner model. (Riggio 2009)

MAJOR FIELDS OF I/O PSYCHOLOGY

Although the major goal of I/O Psychology is to increase the productivity and

wellbeing of employees, there are 2 approaches to how this can be accomplished.

The first is the industrial approach representing the I in I/O Psychology. This

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approach focuses on det. the competencies needed to perform a job, staffing the

org. with employees who have these competences, and increasing these

competences through training.

The second approach is the organisational approach, the O in I/O Psychology. This

approach seek to create an organisation structure and culture that will motivate

employees to perform well, provide them with the necessary information to do their

jobs, and provide working conditions that are safe and result in an enjoyable and

satisfying work environment.

The major sub-fields of I/O Psychology include

Human Resource (personnel) Psychology

Organisational Psychology

Ergonomics/Human factors psychology

Consumer psychology

Career Psychology

Psychometrics

Employee Relations

Organisational Psychology

This domain focuses on the influence organisations may have on the attitudes and

behaviour of their employees.

Human Resource Psychology

Is more concerned with individual level issues

Organisational Psychology is more concerned with social and group

influences, culture and climate and leadership behaviour on the overall

effectiveness or performance of the organisation.

Career psychology

This is concerned with counselling employees and assisting them in making career

choices. It is about optimising the respective expectations of the organisation and the

employee and what both are prepared to give to ensure the intergrity of the

psychological contract.

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Ergonomics/Human Factors Psychology

The objective of this field is to modify the work environment to make it compatible

with the characteristics of human beings aka engineering psychology. The term

„human-machine interaction‟ often used to describe ergonomics. Covers robotics

design, workspace design etc.

Consumer Psychology

It is defined as the behaviour that consumers display in searching for, purchasing,

using and evaluating products and services. As such, consumer behaviour looks at

the way consumers make decisions to spend their resources on products or

services.

Human Resource Psychology [Personnel Psychology]

HR Psychology relates to the profession of I/O psychology as a whole. The term „HR‟

or „personnel‟ means people, therefore HR Psychology is concerned with all aspects

of theory of psychology applied to understanding individual differs in work settings.

It‟s important to note that HR Psychology is not synonymous with Human Resource

Management. However, as a field of I/O psychology it represents the overlap

between psychology and HRM.

CONFLUENCES WITH HRM

Although many areas covered by I/O Psychologists appear to be similar to those

covered by HR practitioners, the techniques and reasons behind them are often

different. For example, many HR practitioners advocate the unstructured interview as

an excellent solution for selecting the bets employees, I/O Psychologists on the other

hand consider unstructured interviews to be of less value than more suitable

alternatives such as psychological tests, behavioural interviews and work samples

(Berry, 2003).

Another difference between I/O Psychology and HRM is that HR Psychology

examines factors that affect the people in an organisation as opposed to the broader

aspects of running an organisation. Carless et al (2004) identified a number of

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differences between psychology and HRM. The first difference is the knowledge

foundation.

I/O Psychology relies extensively on evidence-based practices while HRM is

essentially a business study with emphasis more on the practical side than the

scientific.

Another difference refers to the levels of operation. I/O Psychologists focus more on

the design and development of procedures, tools and principles while HR

practitioners work more on the operational level such as the implementation of

selection systems and applying training principles in real training scenarios.

The third difference relates to training. Training for I/O psychologists is based on the

scientist-practitioner model, emphasising both research and practical skills, and

stipulating that practice must be supported by evidence. HR, on the other hand,

emphasises general skills and knowledge.

The fourth difference relates to continuous professional development. For I/O

Psychologists, professional training is a statutory requirement for registration while

for HR practitioners there are no requirements for registration.

HISTORICAL DEVELOPMENT

The origins of I/O Psychology have been a matter of debate and it is not possible to

attribute the field‟s genesis to a single individual. (Stagner, 1982). The examination

of the origins of I/O Psychology reveals 2 names:

Walter Dill Scott

Hugo Munsterberg

Another name also mentioned is Bryan (1904) who was the first one to use the term

industrial psychology. Ironically, it appeared in print only as a typographical emor for

individual psychology. Bryan, the president of the APA in 1903 is a precursor to this

domain.

Another key actor – James McKeen Cartell

Also Lillian Gilbreath

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STRATEGIC HUMAN RESOURCES PSYCHOLOGY

Over the past decade dramatic changes in markets, technology, organisational

design and the roles of employees renewed emphasis and interest in HR

psychology.

The role of the personnel or HR department has shifted to improving organisational

performance by taking the company‟s potential through human capital while

considering the impact or from the external environment and competitive pressures

on performance and behaviour of people.

It is the skills, abilities and capabilities of people that exist within an organisation at

any given time (stock of human capital) along with systems and processes used to

manage this stock of human capital that constitute a source of competitive

advantage. Both human capital and organisational processes can generate

exceptional value when an organisation‟s ability to recruit people with talent and

scarce or critical skills is supported by processes, systems and practices that ensure

people are motivated to work and engage in organisational citizenship behaviours

and perform effectively.

The emphasis on competitive advantage implies that HR practitioner‟s and industrial

psychologists need to spend less time on administrative transactional services such

as payroll administration and more time doing 3 main things:

(i) Supporting senior management strategic planning methods

(ii) Act as the company‟s internal consultant for identifying and instituting

changes that help the company‟s employees contribute better to the

company‟s success.

(iii) Assist management with and advise them on critical decisions they need to

make concerning the employment and retention of valuable, talented,

skilled and high performing people.

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Changing context in employment

1. Globalisation and competition

2. Technological changes

3. Nature of work

4. Change in human capital

5. Demographic trends

HR PLANNING

Bensos (2005) emphasises the human resource strategic role of HR planning.

Bothwell (1985) defined HR planning as a process which helps to ensure that the

right number of the right kinds of people are available at the right times and in the

right places to translate organisational plans into reality.

The process becomes strategic when some attempt is made to anticipate long term

HR supplies and demands relative to changing conditions facing the organisation.

This strategic role can be seen as a means of:

Keeping the human capital competent, motivated so that they add value to the

organisation assisting it to achieve its overall objective.

Becoming involved with cooperate planning at a strategic level.

Ensuring a pipeline of potential successors.

Retaining high potential talented staff.

HRM’S ROLE IN ORGANISATION STRATEGIC PLANNING

As organisations plan for their future, HR managers must be concerned with

matching HR plans with strategic business planning. At the broadest level, strategic

planning addresses the question “what business are we in in?”

HR planning on the other hand addresses the question “What skills are needed for

success in the business?”

Through strategic planning, organisations set major objectives and develop

comprehensive plans to achieve these objectives. This involves making primary

resource allocation decisions including those pertaining to structure, key processes

and the interrelationships among human resources. An increasingly vital element of

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strategic planning is determining if people are available internally or externally to

carry out the organisational goals.

HRP and strategic planning become effective when there is a reciprocal and

interdependent relationship between the two. In this relationship, the top

management team recognises that strategic planning decisions affect and are

affected by HR functions.

Accordingly to the Harvard Business Review (1998) to be fully fledged strategic

partners with senior management, HR executives must guide and compel serious

discussions on how the company should be organised to carry out its strategy.

Creating the conditions necessary for this involves:

(i) HR managers should be held responsible for defining organisational

architecture.

(ii) HR must be accountable for conducting an organisational audit.

(iii) The third role of HRM as a strategic partner is identifying methods for

renovating the parts of organisational architecture that need renovation.

(iv) HRM must take stock of its own work and set clear priorities.

HR PLANNING PROCESS

Cascio (1989) suggested several specific interrelated activities that together

comprise a HR Planning system.

1. Personnel Inventory

This involves the assessment of current HR (skills, abilities and potential) and to

analyse how they are currently being used.

2. HR Forecast

Involves predicting future personnel requirements such as the number of employees

needed, skills mix required, and internal vs external labour supply.

3. Action Plans

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These involve mechanisms of enlarging the pool of people qualified to fill the

projected vacancies through such actions as recruitment, selection, training, paying

attention to remuneration, career development activities etc.

4. Control and Evaluation

This involves the provision of feedback on the overall effectiveness of the HR

planning system by monitoring the degree of attainment of HR objectives.

JOB ANALYSIS

Job analysis is a term used to describe a process of examining jobs in order to

identify the main features, in particular the duties they fulfil, the results they are

expected to achieve, the major tasks undertaken and the job relationships with other

jobs in the organisational hierarchy. It is concerned not only with the analysis of

duties and conditions of work, but also with the individual qualifications of the worker.

The analysis of the physical aspects of a job is usually done by an industrial

engineer who is primarily concerned with job aspects. Industrial psychologists on the

other hand are more concerned with the people aspects of the job or the

requirements of the job in terms of ability, traits etc.

Importance of J.A

A thorough job analysis is the foundation of almost all HR activities. It is difficult to

imagine how one would write a job description, select employees, evaluate

performance or conduct training programmes without knowing the tasks an

employee performs, the conditions under which they are performed, and the

competencies needed to perform the tasks.

There are a number of uses of J.A

(i) It clarifies posts for which new recruits are sought

(ii) J.A. can be used to prepare job descriptions which provide essential evidence

for selection.

(iii) It enables job specifications to be drawn up for the purpose of selection or

training.

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(iv) It can provide basic material on which performance appraisals can be based.

(v) It is a prerequisite for any analytical attempt at job evaluation.

(vi) It can aid the review of organisation, structures by clarifying the basic units of

the organisation.

To the individual employee, J.A can:

(i) Give a clear idea of their main responsibilities

(ii) Provide a basis for arguing for job redesign

(iii) Provide relevant information with respect to any appraisal which may be

conducted.

(iv) They can have an opportunity to participate in setting their own short-term

targets and objectives.

METHODS OF JOB ANALYSIS

1. Observations of job incumbents

may use checklists

advantage: Simple

disadvantage: change in behaviour due to presence of observer difficult for

jobs without overt observable tasks especially mental

activities/abstract jobs

2. Interviews with incumbents

Identify employees who can tell you about the job and what it entails.

Interviewer may have interview guide.

Adv: - Ideal for abstract/mental jobs

- Overcomes problem of long work cycle

- Misconceptions can be clarified since it‟s a conversation

Can identify representatives of employees and have them come to a subject matter

expert conference. Then interview them in form of a focus group.

3. Job Occupant Description

Aka survey

Design questionnaire, distribute to all employees with that job

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Covers tasks, role prescriptions, skills reg

Collect and summarise data

Advantage: - A lot of information in a very short time

- More people covered

Disadvantage: - No opportunity for clarification

4. Job/Work Diaries

Job holders record their day-to-day activities. Job analyst then goes through the

diary.

Advantage: works for abstract/mental jobs

5. Job Participation

Analyst performs the job to get to know more about it.

Then record what you‟re doing.

Disadvantage: Works for jobs that don‟t reg. much expertise and experience. Some

jobs need extensive training for competence.

6. Work Materials

Looking at the tools and equipment used for that job. They give a picture of what the

job entails.

7. Critical Incidents

Job incumbent describes aspects of their job that are critical for success or failure.

Can be done using questionnaires or interviews.

Usually use a combination of methods to get a complete picture of what the

job entails. [triangulation]

Studying documentation - instruction materials.

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JOB DESCRIPTIONS

A job description is a written statement of the tasks, duties and behaviours required

in a given job. It is a written statement of what the job entails.

Job descriptions may take one of several forms depending on the nature of the job.

Routine jobs that are manual in nature are best described with an emphasis on the

tasks to be achieved, whereas managerial jobs require the emphasis to be on results

to be achieved.

Job descriptions cover the following features of the job:

(i) Job title

(ii) Summary – brief two sentence statement describing the purpose of the job

and the outputs expected from job incumbents.

(iii) Key performance areas – a description of the primary job duties and

responsibilities in terms of what is done, how it is done, and why it is done.

(iv) Equipment. A clear statement of tools, equipment and information required for

effectively performing the job.

(v) Work environment. A description of the working conditions of the job, the

location of the job, and other relevant characteristics of the immediate

work environment such as hazards and noise levels.

JOB SPECIFICATIONS

These evolve from the job description and indicate the competencies (skills,

knowledge, abilities and other characteristics) needed to perform the job effectively.

Job specifications are useful for offering guidance for recruitment and selection.

RECRUITMENT

The success and failures of an organisation are largely determined by the calibre of

its employees and the effort they exert.

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Recruitment is the development and maintenance of adequate manpower sources. It

is a process of seeking and attracting suitable candidates from within the

organisation or from outside the organisation for job vacancies that exist.

„Suitable candidates‟ implies that those who possess the required characteristics to

perform the job satisfactorily need to be recruited.

IMPORTANCE OF RECRUITMENT

1. To link with and be consistent with the strategy, vision and values of the

organisation.

2. To determine an organisation‟s present and future recruitment need, informed

by the Human Resource Plan and J.A.

3. To increase the pool of qualified applicants.

4. To support organisational initiatives in managing workforce diversity.

5. To increase the success rate of the selection process by reducing the number

of under-and over-qualified job applicants.

6. To help reduce the probability that job applicants, once recruited and

selected, will leave the organisation after only a short period of time. [realistic

job preview]

7. To coordinate the recruitment efforts with selection and training programmes.

RECRUITMENT POLICIES AND PROCEDURES

Organisations need to have policies and procedures that guide the recruitment

process. The recruitment process has to be planned, and there is a need to

determine who will do the recruiting and now they should prepared. There‟s also a

need to act, what kind of recruiting will be used, where it will be done, and what

sources and methods of recruitment will be used.

The recruitment policy represents the organisation‟s code of conduct with regards to

the recruitment activity. An example of a recruitment policy given by Cole (1997)

involves:

(i) Advertise all posts ad vacancies internally

(ii) Reply every job applicant with the minimum of delay

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(iii) Aim to inform potential recruits in good faith about the basic details and job

conditions of every job advertised.

(iv) Aim to process all applications with efficiency and courtesy.

(v) Seek candidates on the basis of their qualifications for the vacancy

concerned.

(vi) Aim to ensure that every person invited to an interview or to selection will e

given and a thorough hearing.

SOURCES OF AND METHODS FOR OBTAINING JOB APPLICANTS

Sources refer to the segments of the labour market where applicants can be found,

such as schools, universities and other organisations.

Methods refer to specific ways of obtaining applicants.

Internal Recruitment

An organisation might decide to fill job openings using their current employees.

Advantages: - Cuts costs [no need for newspaper ads]

- No need for induction

- Motivational tool

Disadvantages: - stifles innovation

1. Promotion

Promotion from within is the cornerstone of internal recruitment, especially, with

regards to jobs that require one to be familiar with the people, procedures, policies

and characteristics of the organisation.

NB: Success at one level doesn‟t guarantee success after promotion

2. Transfers

These normally take place when employees are moved laterally to different types of

jobs. They are often used to develop talent with a broad view of the organisation, a

view that may be instrumental in future promotions.

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3. Job Rotations

The difference between transfers and rotations is that transfers are likely to be

considered as somewhat permanent while job rotations are usually temporary.

However, the two share a similarity in that both methods expose employees to

various aspects of organisational life.

4. Recalls

Retired or laid off employees can be called back to the organisation. Adv: they

already know the organisation.

Ways of recruiting internally

Internal apps of job vacancies are obtained by displaying a notice on the bulletin

board, word of mouth, examining company personnel records and obtaining ratings

from assessment activities such as performance appraisals.

External Recruitment

Recruiting from outside has the advantage of bringing in people with new ideas. If

internal candidates would require training to be qualified, then it may be cheaper to

hire already trained people.

1. Employee Referral Programmes

These are word-of-mouth adverts through which current employees refer applicants

from outside the organisation. People referred tend to identify more with organisation

and stay longer. You can use person who refers as a guide to how applicant might

do on the job.

2. Walk-In Applicants/White-Ins

This is a candidate who becomes an applicant by merely walking into the company

premises looking for a job or by writing to the organisation even though no such job

has been advertised.

3. Employment Agencies

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These are good sources of permanent and temporary employees. Job seekers

register with an agency and upon being employed by an organisation the agencies

are paid a fee. (Sometimes paid by the organisation or by the employee) eg IPCC.

4. Professional Associations

Many professional associations operate placement services for their members at

their annual conventions. They provide facilities that enable job seekers and

employees to meet e.g IPMZ.

5. Colleges

Most managers make it a practice that they recruit college graduates for trainee

positions. May organise career fairs.

6. Advertising

Many organisations make use of advertisements in newspapers, magazines and

professional journals or periodicals. [Most common]. Pick newspapers with wide

readership or specific targeted leadership.

EMPLOYEE SELECTION

Overview

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Selection and assessment are seminal topics in HR psychology and early interest

was driven by the need to select good military personnel. Recent recognition of the

strategic potential of selection to enhance organisation performance has

reinvigorated the field.

Selection involves sorting out applicants for a vacant job as well as eliminating those

applicants who do not fit the requirements of the job or the organisation. Murchinsky

(2003) defines personnel selection as the process of identifying from a pool of

recruited applicants those to whom the job will be offered.

Importance of selection

The objective of selection is to assess which applicant(s) will best fit a specific job.

Selection is a major expense for organisation, and a lot of money is spent on

recruitment, selection and training.

Additionally, there is a cost incurred by the new employee‟s inability to meet

performance requirements while learning the job. Often it takes a year before the

employee actually deserves the salary for the position. The costs are even greater if

the wrong person is selected/hired. Despite the high costs of selection, research has

shown conductively that good selection pays off selection affects the quality of

personnel and their task performance.

Training will also be more successful if you select the right quality people.

Poor selection causes a poor fit between the job and the individual, which

contributes to job dissatisfaction, poor performance, and higher labour turnover.

[Wrong employee becomes toxic – affects other EYES and therefore the costs

become exponential]

SELECTION VALIDATION PARADIGM

The selection process assumes that the systematic assessment of ability or potential

of a person to meet a particular set of job criteria can be precisely evaluated. This

should enable a forecast or prediction to be made about the suitability of a person for

a particular job.

The selection validation approach is the prevailing model in recruitment science. It

assumes that the key to predicting performance is to identify a job relevant outcome

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criterion/criteria (attribute being measured) and a predictor that will generate

evidence with good discriminating power against the criterion.

e.g 1. criterion: stamina and endurance for army predictor: run 15 miles in under 30

mins

3. criterion: physical strength

predictor: physique e.g weight ≥ 50kg

* Predictor must dovetail with criterion

Requirements of selection predictors

Personnel selection is based on individual differences between people. The work

performance of different individuals also differs. This stresses the importance of

individual differences in the selection of the right person for the right job.

Thus before a selection predictor is used, it must be valid, reliable and fair.

(a) Reliability:

The reliability of a predictor refers to the consistency of performance of the same

individual on a predictor at different times.

A predictor must be reliable.

Types of reliability

(i) Test-retest

(ii) Parallel forms reliability

(iii) Inter-rater reliability

(i) Indicates the relationship between the scores of the same people on the same

predictor on different occasions.

(ii) Indicates the correlation between predictor scores of the same people in

equivalent forms of the test on different occasions.

(iii) Assessed by calculation the correlation between the ratings of answers on a

predictor by different assessors. This type of reliability gives an indication

of the objectivity of the scoring procedures.

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(b) Validity:

The term validity refers to how well a measure assesses the attribute it is being used

to assess. An intelligence test is valid if it measures intelligence as it is defined. High

reliability is no guarantee of high validity, although low reliability is a sure indicator of

low validity.

There are 4 main ways of assessing validity, but it is important to note that validity of

one kind does not necessarily imply validity in another. The validity of a predictor is

not absolute but is relative to its intended use. A predictor is valid as long as it

successfully measures the attribute that the user intends it to measure.

(i) Construct Validity – Extent to which tool actually measures the construct it is

intended to measure.

A predictor e.g an intelligence test has construct validity if it correlates with a specific

construct e.g intelligence. It takes time to assess the construct validity of a test

because the relationship between a predictor and other measuring instruments must

be determined.

(ii) Content validity

A predictor has content validity if its items are representative of important aspects of

a dimension or job, for example are the items in an IǾ test representative of what

can be defined as intelligence?

(iii) Face Validity

Is a non-statistical types of validity which indicates what the test measures at face

value. It assesses whether a measure appears valid to the test domain.

High face validity is necessary to create a positive attitude towards the predictor.

(iv) Criterion related validity

This measures scores on a predictor which is usually a selection device. It also

measures scores on the criterion, which is usually, job behaviour such as

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performance, absenteeism and training success. A predictor score and a criterion

score are obtained for each person in a sample and the statistical relationship

between the two sets of scores is computed.

Predictors in validation are usually chosen because they are similar to the actual

selection techniques the organisation is considering.

A good predictor distinguishes applicants from each other and does it reliably.

Criterion related validity therefore pertaining to whether a measurement tool can

account for significant variance in the criterion. A valid test of cognitive ability should

yield a score that predicts job success.

There are 2 ways of assessing criterion validity:

1. Predictive Validity

Indicates if a predictor e.g IǾ test or interview can be used to predict future job

performance. Predictor scores are gathered from a sample of applicants (not

current employees). Next, selection decisions are made regarding these

applicants without considering their scores on the predictor. Criterion scores e.g

quality and quantity of work or ratings by supervisors are gathered after the

employed has been working for a while, e.g 6 months. After that, the correlation

between the predictor and the criterion is calculated. Predictive validity is

indicated if the employee who scored high on the predictor performs well on the

job. This method eliminates the disadvantages of the concurrent validity design

but requires more time and administration and the results are not immediately

available.

2. Concurrent Validity

In the case of concurrent validity the predictor scores (e.g scores on an IǾ test) of

current employees are correlated with their job performance, i.e. Quality and quantity

of work. The predictor and criterion data are gathered at the same time [concurrent].

The correlation co-efficient between the predictor and the criterion is called the con-

current validity of a predictor.

Organisations use this method because time and cost considerations make it

impossible to act.

The predictive validity of a predictor.

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The disadvantage of the con-current study is that poor performers are not included in

the study, and employees may perform better because of experience.

Selection validation

Selection validation is synonymous with criterion validity. The term validation refers

to the process of assessing the validity of a measure. Validation indicates whether it

is justifiable to make particular inferences from a score obtained on the predictor.

There is a general tendency to use concurrent techniques. However, these have less

forecasting potential. The most often used index of criterion validity is the validity

coefficient.

The validity coefficient is a correlation coefficient between a predictor measure e.g a

psychometric test and a criterion measure e.g work performance, applied to the

same group of individuals.

The validity coefficient expresses the degree to which those two scores are in

agreement/correlated with one another.

Selection criteria

It is generally agreed that the criterion used in the selection should be derived from a

judicious combination of performance theory and systematic job analysis. For

selection purposes, job analysis should enable the identification of those

characteristics that typify the best person for the job and that predict not only current

but also future job performance. These should feel onto job descriptions and job

specifications.

PERFORMANCE MANAGEMENT

Performance Management (PM) denotes a set of practices that are integral to a

much broader PM strategy involving performance assessments, development and

reward (Fletcher, 2001).

Performance appraisals are no longer viewed as an event but should be seen as a

crucial medium not only for managing individual level performance but for integrating

this with corporate level performance considerations. Industrial Psychologist are

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concerned with the scientific study of employee performance because so many

personnel and HR activities rely on job performance measurement.

JOB PERFORMANCE MEASUREMENT

Can be described as the collection and use of judgements, ratings, perceptions and

more objective sources of information to better understand the performance of an

individual.

PERFORMANCE APPRAISAL

The process of assessing and evaluating employee performance formally. It looks

back to past behaviour and looks forward to set objectives and targets for the next

year and to identify learning and development needs to improve performance.

PERFORMANCE MANAGEMENT

Over the past two decades, the concept of performance management has emerged

which adopts a future oriented strategic focus aimed at maximising current

performances and future potential.

Performance management extends beyond the concept of performance appraisal

and refers to a system or framework through organisations set work goals, det.

Performance standards, assign and evaluate work provide performance feedback by

means of performance appraisals or formal reviews, define training needs and

distribute rewards.

GOALS OF PERFORMANCE MANAGEMENT

The goals of PM are linked to the overall purpose of PM there are 2 approaches to

appraisal, namely: evaluative appraisal and development – oriented appraisal

(Milward, 2008).

Demarcation is mainly just academic, usually they are simultaneously evaluative –

retrospective perceptive. Development oriented – futuristic, to identify areas needing

training.

PURPOSE OF PERFORMANCE MANAGEMENT

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The overall purpose of P.A is to provide an accurate and objective measure of how

well a person is functioning or performing a job.

Dreath (1998) noted that performance appraisals have a multipurpose character and

serve the following functions:

(i) Performance measurement and improvement

(ii) Remuneration and promotion

(iii) HR planning purposes

(iv) Development purposes

(v) Validation of selection methods

(vi) Identification of training needs

(vii) Evaluation of training outcomes

PERFORMANCE CRITERIA STANDARDS

PM should be based on specific tasks that the employee accomplishes or fails to

accomplish. Performance standards should be narrow and job-focused. Performance

standards can be det. by conducting a job analysis and job description. Many things

can be measured to det. Performance. However, the dimensions of performance

against which an employee is evaluated [the criteria for evaluation] must be very

clear to the employees.

Examples include:

Quality of work

Quantity of work

The criteria used in P.A. can either be trait-based, behaviour-based, or outcome-

based.

ESTABLISHING A PERFORMANCE MANAGEMENT SYSTEM

1. Determine the purpose of the PM system/process.

2. Determine the performance criteria.

3. Determining who will be involved in assessing performance. Peer appraisals,

self-appraisals, supervisor appraisals?

4. Selecting the appropriate appraisal methods. Objective is subjective

measures. Objective measures e.g output measures. Subjective essays.

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5. Involving management and employees.

6. Designing the appraisal system. Policies, instruments, record-keeping, appeal

procedures.

7. Training the appraisers.

8. Implementing the system.

9. Evaluating and adapting the system

PERFORMANCE APPRAISAL METHODS

Objective Methods

1. Quantity of work – jobs with countable products

2. Quality of work – e.g typing jobs

3. Attendance

4. Safety. Look at safety records e.g bus drivers, mining companies

5. Critical incidents. Records of critical behaviours for success or failure on the

job.

Depends o0n job. Abstract jobs

Subjective Methods

1. Essay evaluations/written narratives e.g supervisor writes essay and appraisal

based on that. Usually7 only used as an appendage to others or as a guide.

Comparative methods

1. Ranking

2. Paired comparisons

3. Forced distribution – trying to come up with a normal distribution curve.

Compared to other employees, not to a standard.

Paired comparisons more systematic:

a b c d

a 3 3 1 Better performer gets 3, worse gets 1.

If same, give both 2. Add scores, rank

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b

c

d

Major weakness – being ranked is really not enough feedback for the

employee.

Rating Methods

1. Graphic Rating Scales

2. Behaviour checklists

3. Behaviour rating scales

Evaluated against a set standard. Rating keys used for selected measures,

based on Liket scale.

Goal-Based methods

1. Management by Objectives (MBO). Very popular, focuses on what employee

does, evaluates it against agreed objectives. Objectives agreed with

supervisor at beginning of year; quarterly reviews.

Appraise – centred approach, involves employees.

2. Balance scorecard (Kaplan and Norton, 1996)

Assesses employee performance against 4 dimensions: Financial, Customer,

Internal Business and Learning and Growth.

Attempts to intergrate individual standards with organisational goals and

overall objectives.

Computerised Performance Monitoring

E.g CCTV networks in banks can be used to look at performance.

Systems in industries that record output/products produced.

Satellite tracking and monitoring of thick drivers, bus drivers.

„Black box‟ on flight monitoring system

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RATERS OF PERFORMANCE

Who conducts the performance appraisal?

1. Managers and supervisors. Most common.

2. Upward Feedback. Subordinates do appraisal of supervisor, management

skills(usually done developmentally)

3. 360 degree feedback (Multi-source appraisals. Subordinates, supervisor,

customers, people you interact with)

4. Peer assessment. Workmates appraise (Usually not done when appraisal is

being used to make decisions and determine Pay. Logic – real behaviour

exhibited with workmates, they spend more time with)

5. Interactive panels(Two or more people appraising your performance. E.g

where employee was being transferred across depts. All supervisors agree on

score, or their scores averaged)

6. Self-appraisal.

RATING ERRORS

1. Halo effect

2. Horns effect

3. Central tendency error

4. Leniency effect

5. Strictness effect

6. Contrast effect

7. „similar-to-me‟ error

8. Personal bias

9. Recency effect

10. Relationship effect

11. Standards

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COMPENSATION MANAGEMENT

The terms „compensation‟, „wages‟, „salaries‟, „reward‟ o „pay‟ are often used

interchangeably to refer to employee remuneration and rewards. Compensation

refers to all forms of pay and rewards employees receive in return for their efforts on

behalf of the employer.

Reward systems include the following:

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1. Direct financial payments in the form of a salary, incentives, commission,

bonus etc.

2. Indirect payments such as employer-paid Medical Aid and pension benefits.

3. Non-financial rewards such as intrinsic and extrinsic motivation in the form of

job enrichment, praise and appreciation.

PURPOSES OF COMPENSATION

1. Recruiting High Quality employees and retaining their services. [attract]

2. Improving employee performance

3. Ensuring fairness

4. Controlling labour costs

5. Motivating employees

2 – Performance-based incentives/bonus systems improve performance, motivate.

3. – Internal equity: equal pay for equal work [for different employees]

External equity: What other people are being paid for the same job in different

organisations.

4. – Labour cost cuts on profitability therefore need to manage and

compensation so that organisations remains viable.

FACTORS INFLUENCING REMUNERATION

1. Government – Acts that govern compensation e.g minimum wage stipulations.

2. Trade Unions – especially in countries where TUs are very powerful. Through

collective bargaining, collective job action.

3. Economy – Economies performing well „pay more‟

4. Labour market – Supply and demand of labour act. Compensation rates. Area

where skills are scarce „pay more‟.

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METHODS OF JOB EVALUATION

All jobs are important, but some are more important than others. Those doing core

business vs support services.

Job evaluation is any activity which sets out to make a systematic compensation

between jobs to assess their relative worth for the purpose of establishing a rational

pay structure (Cole, 2001).

In essence, job evaluation aims to reduce reliance on arbitrary methods of pay

determination by introducing an element of objectivity in the way jobs are compared.

Thus the purpose of job evaluation is to produce a defensible ranking of jobs on

which a rational and acceptable pay structure can be built.

Every job evaluation requires at least some basic job analysis. In order to provide

factual information about the jobs concerned. It provides a basis for negotiating pay

rates when an organisation bargains collectively with a union.

Features of job evaluation

1. It attempts to assess jobs, not people

2. Standards of job evaluation are relative, not absolute.

3. The basic information from job analysis.

4. Job evaluation is carried out by groups, not by individuals. [Job evaluation

committees in most organisations]

5. Job evaluation committees utilise concepts such as logic, fairness and

consistency in their assessment of jobs.

6. There is always an element of subjective judgement in job evaluation.

7. Job evaluation does not determine pay structures or pay scales but merely

provides the evidence on which they may be devised.

Four methods of job evaluation

1. Job ranking

2. Job grading/job classification

3. Point system

4. Factor comparison

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