Total Rewards and

Performance Management

The Total Reward Principles

• Create a positive and natural reward experience.• Align rewards with business goals to create a win-win

partnership.• Extend people’s line of sight.• Integrate rewards.• Reward individual ongoing value with base pay• Reward results with variable pay.

Four Components of Total Rewards

Total Reward Components: The Better Workforce Deal

Individual Growth

Total Pay

Compelling Future

Positive Workplace

Four Components of Total Rewards

Total Reward Components: The Better Workforce Deal

Individual Growth•Investment in people•Development and training•Performance management•Career enhancement

Total Pay•Base pay•Variable pay, including stock•Benefits or indirect pay•Recognition and celebration

Compelling Future•Vision and values•Company growth and success•Company image and reputation•Stakeholdership•Win-win over time

Positive Workplace•People focus•Leadership•Colleagues•Work itself•Involvement•Trust and commitment•Open communications

Traditional Compensation System

• Payment based on tasks• Assumes stability of employment• Rewards individual contributions• Primarily wages, salaries, benefits, some bonuses• Rigid, resistant to change

Equity Issues

• Individual equity

– Compare my outcome/input ratio with some other’s outcome/input ratio

• Internal equity

– Relative worth of job withinwithin org– Job evaluations

• External equity

– Market forces– Supply/demand– Conduct salary surveys

Traditional Compensation: Paying Jobs (A)

• Job analysis– Job descriptions

• Job related information only– Job specifications

• Person related information only• KSAs, education, experience,

certifications– Job evaluation

• Identifies the relative worth of the job to the organization

• Not performance appraisal

Traditional Compensation: Paying Jobs (B)

• Paying jobs– Job evaluation for pay range (hourly, weekly, monthly,

yearly)– Individual salary determination

• Seniority• Cost of living adjustments• Merit/performance• Bonuses (all types)• Some group plans• Secrecy/managerial discretion

– Relatively static model

Traditional Compensation: Paying Jobs (C)

• Job evaluation– Assumes “pay jobs,” not “pay people”– Systematic method of comparing jobs– Creates pay range for job, not person – Tie to job description– Legal, practical support– May break job into components, or job factors

• Skill, effort, responsibility, working conditions (from EPA (1963)/FLSA (1938)

• External salary surveys– Identify market rates– Supply and demand for skills

Job Evaluation Systems Type of Comparison

Job vs. Job JOB vs. Standard

Whole JobRanking (P. 247)

Classification (P. 250)

Specific Job Factors Factor

Comparison (P. 255)

Point Factor (P. 263)

Part of Job

Job Evaluation Systems

Compares which part of job

– Whole job • Ranking• Classification

– Specific job factors• Factor

comparison• Point factor

Type of comparison made

– Job vs. Job• Ranking• Factor

comparison– Job vs. Standards

• Classification• Point factor

What is Job Analysis

• Job analysis is a set of procedures which collect information describing the…– Job Behaviors– Job Activities– Personal Characteristics– Knowledge, Skills and Abilities

(KSAs)

…needed to perform a job.

Uses of Job Analysis

• Applicant Recruitment• Applicant Selection• Creating Job Descriptions• Compensation Decisions• Performance Appraisals• Training

Legal Reasons For Job Analysis

• Uniform Guidelines state that companies should have a job analysis of the position completed to show the appropriateness of the employment decision

• In adverse impact and disparate treatment cases, courts immediately look to job analyses for evidence of decision validity

Two Types of Job Analysis

• Interviews – either individual or group– Advantages:

• Questions can be adapted to fit answers• Ensures deep understanding of the position

– Disadvantages• Personal biases, Time consuming, One person in

group can dominate discussion

Two Types of Job Analysis

• Questionnaires– Advantages:

• Useful when there are a large number of participants

• Less time consuming than interviews– Disadvantages:

• Costly to develop, can have problems with response rate

Common Job Analysis Techniques

• Task/KSA Analysis

– Used for:• Creating job

descriptions• Recruitment/

Selection• Performance

Appraisal• Training• Some compensation

decisions

• Position Analysis Questionnaire (PAQ)– Used for:

• Comparisons across jobs

• Some compensation decisions

Task/KSA Analysis

• A method of collecting information about a position by talking with experts (e.g., incumbents, managers, etc.)– Information is job-specific – cannot be generalized to

other positions– Typically consists of interviews and several surveys

Task/KSA Advantages and Disadvantages

• Advantages– Gives an in depth

understanding of a specific job

– Can be easily used for employment decisions, performance management, and training

• Disadvantages– Very time consuming– Problems of expert

biases– Cannot apply

information to other jobs

Task/KSA Methods

• Step 1: Collect information on the position being analyzed.– Interviews, observation, participation, previous job analyses, Dictionary of Occupational

Titles, or O*Net (a website maintained by the Dept. of Labor)

• Step 2: Create a preliminary list of the tasks and KSAs needed in that position.

• Step 3: Accuracy and completeness check.– Send list to subject matter experts (SME) to check for accuracy or any missing job

components

• Step 4: Criticality survey.– Construct a survey to give to SMEs where they rate the importance of each task and KSAs– Also good to ask how often tasks are done and when employees should have important

KSAs.

• Step 5: Statistical analysis– Drop tasks/KSAs with low means or high standard deviations.

• Step 6: Linkage survey– Create survey asking SMEs to link tasks with the KSAs needed to complete them.– What to do with unlinked KSAs? Drop them

• Step 7: Final task and KSA list

Task/KSA Analysis for… Selection/Recruitment

• Allows companies to determine the most important hiring qualifications

• Helps companies create accurate job descriptions for future and current employees.

• Helps make selection processes legally defensible.

Example Task Statements for a Police Officer

• Talks with community members• Drives patrol vehicles• Restrains suspects• Explains laws to citizens• Writes daily reports• Completes parking tickets and other forms

Example KSA list for Police Officer

• Communication – Be able to effectively inform others either written or orally.

• Physically fit – Must be in good health and be able to perform rigorous activity if needed.

• Safe driving – Able to safely operate patrol vehicles on residential streets and highways at normal and high speeds

Task/KSA analysis for… Training

• Identifies KSAs necessary for a position, which helps with training design

• Can help to decide what skills are most important to help create training strategy

• Can identify which skills can be trained and which need to be present at hiring

Task/KSA Analysis for… Performance Appraisal

• Identifies job relevant behaviors to include on performance management tools.

• Helps to ensure that rating systems for performance management, pay decisions, and employment decisions are valid.

Position Analysis Questionnaire (PAQ)

• The PAQ is a generic, off-the-shelf survey– Consists of 195 items– Worker-oriented – items describe general worker

characteristics• PAQ is filled out by trained observers who are experts

on the position

PAQ – Example Items

Importance to this job0) Does Not Apply1) Very Minor2) Low3) Intermediate4) High5) Extreme

Rate how important each of the below is to the position

• Long-handled tools (e.g., hoes, rakes, shovels, picks, axes, brooms or mops)

• Applicators (e.g., brushes, rags, or paint rollers which are hand-held and used in applying solutions or materials)

PAQ – Advantages/Disadvantages

Advantages– Allows for comparison

across jobs– No development cost– Smaller samples can be

used– Less time consuming

than Task/KSA analysis

Disadvantages– Costly to administer?– Does not tell you

detailed information about specific jobs

– Doesn’t do well at distinguishing between jobs

– Requires a college reading level

Job Analysis for… Compensation

Decisions

• Task/KSA analysis establishes valid job components to base performance appraisals and pay changes on.

• PAQ allows for comparisons of jobs with other generally similar jobs– Benchmarking

Tips for Job Analysis

• Job analyses should be updated regularly or when the responsibilities of the position change

• For increased legal defensibility, document the job analysis process

Questions?

In Class Activity

Task/KSA analysis

• Position: Police Officer

• SMEs: You

Directions1. Split into groups of 3-5

people2. In your group, take 10- 15

minutes to create two lists -1. The tasks associated

with being a police officer

2. The KSAs needed to be a police officer

Performance Management Defined

This is an ongoing communication process, undertaken in partnership, between an employee and his or her immediate supervisor that involves establishing clear expectations and understanding about the jobs to be done. It is a system.

Performance Appraisal and Employee Productivity

• Capital• Technology• Human Resources

What people do!?

Systems

• Staffing• Training• Motivation• Appraisal

Adverse Impact

The Process

So?

Performance Appraisal and The Law

Test?

CRA, 1964

• Title VII• EEOC• OFCC/OFCCP

Job Related

JA

Defensible Criteria

Business Necessity

CSRA, 1978

Preventive Measures

So?

System Development & Validation

Do people know what they are supposed to do?

Traits

Cost-Related Outcomes

MBO

Goal Setting

Behaviorally-Based

Appraisal Instruments

Forced-Choice Scales

BARS/BES and BOS

Behaviorally Anchored Rating Scales/Behavioral Expectation

Scales• Behavioral anchors

– Each # has a discrete meaning• Critical incidents• Expectations only• One scale per dimension/ criterion

– Many behaviors on each scale• Requires internal consistency between behaviors• Allows for feedback

BARS (Behaviorally Anchored Rating Scales)

• Self-Management 1 2 3 4 5

• Communication 1 2 3 4 5

• Attitude 1 2 3 4 5

• ? 1 2 3 4 5

verypoor

verygood

Behavioral Expectation Scale (Employee example: Work Habits)

7 Could be expected to come to work 5 days/week

6 …

5 Could be expected to inform supervisor in event of an absenteeism or late arrival

4 …

3 Could be expected to miss 2-3 days of work per month

2 …

1 Could be expected to come to work on what appears to be a random schedule

BOS (Behavioral Observation Scales)

• Numerical anchors– “Almost never,” “almost always”

• Critical incidents• Observations• Many scales per dimension/ criterion

– One scale per behavior• Allows for feedback• Allows for comparisons between employees

Behavioral Observation Scales (Manager example: Overcoming Resistance to

Change)

1. Describes the details of the change tosubordinates. ___ ___ ___ ___ ___ ___ ___

2. Explains why the change is necessary. ___ ___ ___ ___ ___ ___ ___3. Discusses how the change will affect

the employee. ___ ___ ___ ___ ___ ___ ___4. Listens to the employee’s concerns. ___ ___ ___ ___ ___ ___ ___5. Asks the employee for help in making

the change work. ___ ___ ___ ___ ___ ___ ___6. If necessary, specifies the date for a

follow-up meeting to respond to theemployee’s concerns. ___ ___ ___ ___ ___ ___ ___

Total = _____

Almost 1 2 3 4 5 AlmostNever Always

Below Adequate 6-10Adequate 11-15Full 16-20Excellent 21-25Superior 26-30

So?