Session 4 Traditional Basis For Pay
Session 4 Traditional Basis For Pay
Session 4 Traditional Basis For Pay
Chapter 4
Performance Management
In an effective organization, work is planned out in advance. Planning means setting performance expectations and goals for groups and individuals to channel their efforts toward achieving organizational objectives. Getting employees involved in the planning process will help them understand the goals of the organization, what needs to be done, why it needs to be done, and how well it should be done. The requirements for planning employees' performance include establishing the elements and standards of their performance appraisal plans.
Performance Management
Performance elements and standards should be measurable, understandable, verifiable, equitable, and achievable. Through critical elements, employees are held accountable as individuals for work assignments or responsibilities. Employee performance plans should be flexible so that they can be adjusted for changing program objectives and work requirements. When used effectively, these plans can be beneficial working documents that are discussed often, and not merely paperwork that is filed in a drawer and seen only when ratings of record are required
Performance Management
In an effective organization, assignments and projects are monitored continually. Monitoring well means consistently measuring performance and providing ongoing feedback to employees and work groups on their progress toward reaching their goals. Requirements for monitoring performance include conducting progress reviews with employees where their performance is compared against their elements and standards. Ongoing monitoring provides the opportunity to check how well employees are meeting predetermined standards and to make changes to unrealistic or problematic standards. By monitoring continually, unacceptable performance can be identified at any time during the appraisal period and assistance provided to address such performance rather than wait until the end of the period when summary rating levels are assigned
Performance Management
In an effective organization, employee developmental needs are evaluated and addressed. Developing in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility, improving work processes, or other methods. Providing employees with training and developmental opportunities encourages good performance, strengthens job-related skills and competencies, and helps employees keep up with changes in the workplace, such as the introduction of new technology. Carrying out the processes of performance management provides an excellent opportunity to identify developmental needs. During planning and monitoring of work, deficiencies in performance become evident and can be addressed. Areas for improving good performance also stand out, and action can be taken to help successful employees improve even further
Performance Management
From time to time, organizations find it useful to summarize employee performance. This can be helpful for looking at and comparing performance over time or among various employees. Organizations need to know who their best performers are. Within the context of formal performance appraisal requirements, rating means evaluating employee or group performance against the elements and standards in an employee's performance plan and assigning a summary rating of record. The rating of record is assigned according to procedures included in the organization's appraisal program. It is based on work performed during an entire appraisal period. The rating of record has a bearing on various other personnel actions, such as granting within-grade pay increases and determining additional retention service credit in a reduction in force. Note: Although group performance may have an impact on an employee's summary rating, a rating of record is assigned only to an individual, not to a group.
Performance Management
Rewarding means recognizing employees, individually and as members of groups, for their performance and acknowledging their contributions to the organizations mission. A basic principle of effective management is that all behavior is controlled by its consequences. Those consequences can and should be both formal and informal and both positive and negative. Good performance is recognized without waiting for nominations for formal awards to be solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward good performance like saying "Thank you" don't require a specific regulatory authority. Nonetheless, awards regulations provide a broad range of forms that more formal rewards can take, such as cash, time off, and many nonmonetary items. The regulations also cover a variety of contributions that can be rewarded, from suggestions to group accomplishments.
Performance Appraisal
A performance appraisal, is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding manager or supervisor It is the process of obtaining, analyzing, and recording information about the relative worth of an employee to the organization. Performance appraisal is an analysis of an employee's recent successes and failures, personal strengths and weaknesses, and suitability for promotion or further training. It is also the judgment of an employee's performance in a job based on considerations other than productivity alone.
Comparative Methods
Comparative methods require that managers directly compare the performance of their employees against one another. For example, a data-entry operators performance would be compared with that of other data-entry operators by the computing supervisor. Comparative techniques include ranking, paired comparison, and forced distribution
Comparative Methods
Performance ranking Method The ranking method consists of listing all employees from highest to lowest in performance The primary drawback of the ranking method is that the size of the differences among individuals is not well defined For example, there may be little difference in performance between individuals ranked second and third, but a big difference in performance between those ranked third and fourth This drawback can be overcome to some extent by assigning points to indicate the size of the gaps Ranking also means that someone must be last. It is possible that the last-ranked individual in one group would be the top employee in a different group Ranking becomes very unwieldy if the group to be ranked is very large.
Comparative Methods
Performance ranking Method Rating scale of ranking Much better 5 points Slightly better 4 points Equal 3 points Slightly worst 2 points Much worst 1 point
In the example Allen Jones is the best performer because he was identified most often as the best performer, followed by Bob Brown, (identified twice as better performer) and Mary Green ( identified once as a best performer )
Comparative Methods
Paired Comparison Method Supervisor compare each employee to to every other employee Identifying the better performer in each pair Following the comparison, the employee are ranked according to the number of times they were identified as being the better performer Suited for small group of employees performing similar jobs Advantages and disadvantages of paired comparison analysis It is useful where priorities are not clear. It is particularly useful where you do not have objective data to base this on. It helps you to set priorities where there are conflicting demands on your resources. This makes it easy to choose the most important problem to solve, or select the solution that will give you the greatest advantage
Comparative Methods
FORCED DISTRIBUTION Performance appraisal method in which ratings of employees performance are distributed along a bellshaped curve. This method assumes that the widely known bell-shaped curve of performance exists in a given group The top-ranked employees are considered high-potential employees and are often targeted for a more rapid career and leadership development programs In contrast, those ranked at the bottom are denied bonuses and pay increases. They may be given a probationary period to improve their performance .
Comparative Methods
FORCED DISTRIBUTION (Contd.) Advantages: They force reluctant managers to make difficult decisions and identify the most and least talented members of the work group They create and sustain a high performance culture in which the workforce continuously improves Disadvantages They increase unhealthy cut-throat competitiveness They discourage collaboration and teamwork; They harm morale; They are legally suspect giving rise to age discrimination cases
Narrative Methods
Managers and HR specialists frequently are required to provide written appraisal information Documentation and description are the essence of the critical incident, the essay, and the field review methods These records describe an employees actions rather than indicating an actual rating
Narrative Methods
CRITICAL INCIDENT The manager keeps a written record of both highly favorable and unfavorable actions in an employees performance. When a critical incident involving an employee occurs, the manager writes it down. A list of critical incidents is kept during the entire rating period for each employee. The critical incident method can be used with other methods to Document the reasons why an employee was rated in a certain way. Disadvantages of critical Incident Negative incidents may be more noticeable than positive incidents. It results in very close supervision which may not be liked by the employee. The recording of incidents may be a chore for the manager concerned, who may be too busy or forget to do it. The supervisors have a tendency to unload a series of complaints about incidents during an annual performance review session.
Narrative Methods
Essay evaluation This method asked managers / supervisors to describe strengths and weaknesses of an employees behavior. Essay evaluation is a non-quantitative technique This method usually combined with other method.
Narrative Methods
Essay evaluation (contd.) Disadvantages of essay evaluation Manager / supervisor may write a biased essay. A busy rater may write the essay hurriedly without properly assessing the actual performance of the worker. Apart from that, rater takes a long time, this becomes uneconomical from the view point of the firm, because the time of rater is costly. Some evaluators may be poor in writing essays on employee performance. Others may be superficial in explanation and use flowery language which may not reflect the actual performance of the employee.
FIELD REVIEW The field review has as much to do with who does the evaluation as the method used. This approach can include the HR department as a reviewer, or a completely independent reviewer outside the organization In the field review, the outside reviewer becomes an active partner in the rating process The outsider interviews the manager about each employees performance, then compiles the notes from each interview into a rating for each employee. Then the rating is reviewed by the supervisor for needed changes.
This method assumes that the outsider knows enough about the job setting to help supervisors give more accurate and thorough appraisals. This method assumes that the outsider knows enough about the job setting to help supervisors give more accurate and thorough appraisals. The major limitation of the field review is that the outsider has a great deal of control over the rating. Managers may see it as a challenge to their authority In addition, the field review can be time consuming, particularly if a large number of employees are to be rated.
Example behaviors of a telephone customer service representative taking orders for a national catalog retailer
MBO Process
Multisource Appraisal
Combinations of Methods
There is no one best appraisal method Research has suggested that the method used does not change the accuracy or solve rater errors A performance measurement system that uses a combination of the preceding methods is possible and may be sensible in certain circumstances. Consider combinations to offset the following advantages and disadvantages: Category rating (trait) methods are easy to develop, but they usually do little to measure strategic accomplishments. Further, they may make inter-rater reliability problems worse
Combinations of Methods
Comparative approaches help reduce leniency, central tendency, and strictness errors, which makes them useful for administrative decisions such as pay raises. But the comparative approaches do a poor job of linking performance to organizational goals, and they do not provide feedback for improvement as well as other methods Narrative methods work best for development because they potentially generate more feedback information. However, without good definitions of criteria or standards, they can be so unstructured as to be of little value. Also, these methods are poor for administrative uses. The behavioral/objective approaches work well to link performance to organizational goals, but both can require much more effort and time to define expectations and explain the process to employees. These approaches may not work well for lower-level jobs.
Combinations of Methods
When managers can articulate what they want a performance appraisal system to accomplish, they can choose and/or mix the methods just mentioned to get the combinations of advantages they want For example, one combination might include a graphic rating scale of performance on major job criteria, a narrative of developmental needs, and an overall ranking of employees in a department. Different categories of employees (e.g., salaried exempt, non exempt salaried, maintenance) might require different combinations
Conduct job analyses to ascertain characteristics necessary for a content valid performance appraisal system a. Accurately define parameters of the job b. Define behaviors necessary to perform the job effectively c. Content validity displays the connection between a. and b. (above) d. Periodically review the appraisal instrument for validity
Happen when rater evaluates employees based on a negative or positive opinion of the employee rather than on the employees actual performance First-impression effect a manager would have a tendency to make an initially favorable or unfavorable judgment about an employee, and then ignore or distort the employees actual performance based on this impression Positive halo effect rater generalizes good behavior on one aspect of the job to all aspects of the job Negative halo effect rater generalizes bad behavior on one aspect of the job to all aspects of the job Similar-to-me effect i. Tendency on the part of raters to favorably judge employees whom they perceive as similar to themselves ii. Can lead to charges of illegal discriminatory bias wherein a supervisor rates members of his or her race, gender, nationality, or religion more favorably than members of another class
Bias errors
Contrast errors
a. Takes place when rater compares the employee to other employees rather than to specific performance standards b. This is an error because the employee is required to perform only at minimally acceptable standards
1. 2. 3.
4. 1. 2. 1.
2. 3.
Lack of Open Communication between Management and Employees Concerning employees' performance Concerning supervisors' performance Concerning factors beyond an employees control that effect job performance Mistrust can lead to accusations of bias Undesirable Social Structures Pay grades can reflect status differentials Lower-paid employees may resent never being able to catch-up Factors Other Than Merit Supervisors may subconsciously use age or seniority instead of merit Supervisors may let personal feeling determine pay increases Company politics that puts focus on supervisors' agendas or goals instead of work goals
Requires companies to reduce output costs per employee Merit pay systems appropriate only when a. Pay increases are commensurate with employee productivity, and b. Employees maintain productivity levels over time
1. Requires creative, open-minded, risk-taking employees 2. Companies must take a long-term focus to attain their objectives 3. Merit pay can promote creativity and risk-taking by linking pay with innovative job accomplishments that are established on a regular basis (merit bonus)