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Maintaining Performance
Chapter 12
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.1
Chapter Overview
• Compensation Systems
• Types of Discrimination
• Goal Setting
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.2
• Performance Appraisal Systems
• Managing for Improved Performance
Compensation Systems
The financial reward structures
organizations use to compensate individuals
for the work they perform for the organization
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.3
Goals of Compensation
Systems
1. To produce desired behavior in employees
2. To accomplish the first goal within the limitations faced by the organization
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.4
Types of Incentive Systems
Incentive SystemsIncentive Systems
Individual IncentivesIndividual Incentives
SalarySalary Standard Hour Rate
Standard Hour Rate
Piece-Rate Plan
Piece-Rate Plan
Skill-Based Pay
Skill-Based Pay
Scanlon Plan
Scanlon Plan
Profit Sharing
Profit Sharing
Gain-sharing
Gain-sharing
ESOP ESOP
Group IncentivesGroup Incentives
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.5
Employee BenefitsPension Plans Vacation Time
Holiday Pay
Jury-duty Pay
Health Insurance
Employee Assistance Programs
Flextime
Social SecurityWorkers Compensation
Unemployment Compensation
Telecommuting
Disability Insurance
Lawrence Erlbaum Associates, Publisher, Copyright 2002
Travel Pay
12.6
Noneconomic Rewards
• Intrinsic Job Rewards (i.e. flextime)
• Extrinsic Job Rewards (i.e. annual
banquets)• Non-job Based Rewards
(i.e. status)
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.7
Types of Discrimination
• Legal and fair
• Legal and unfair
• Illegal and fair
• Illegal and unfair
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.8
Goal Setting
Specifying a direction for action and a
specific quantity of work to be accomplished
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.9
Steps in Setting Performance
Goals1. Specify the general objective or task
2. Specify how performance will be measured
3. Specify the standard or target to be met
4. Specify a deadline for performance
5. Prioritize goals
6. Determine coordination requirements
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.10
Performance Appraisal Systems
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.11
Conflict and Problems in Performance
Appraisals• Responding honestly to shortcomings while being
evaluated for salary increases or promotions
• Most supervisors are unable to convey negative feedback effectively
• Lack of incentives for supervisors to conduct high-quality performance appraisals
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.12
• Supervisors often find themselves in no-win situations
• Employees often display discomfort during the process
• Universal dissatisfaction with the process
Improving Performance Appraisal Systems
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.13
Rating Scales• Graphic Rating Scale - This instrument asks the rater to provide general evaluations of ratees’ performance in various areas of the job
• Behavior Observation Scale (BOS) - This instrument asks raters to report and describe the frequency of specific job-related behaviors
• Behaviorally Anchored Rating Scale (BARS) - This instrument consists of a set of rating scales, each of which is composed of brief examples of critical incidents of effective and ineffective job performance
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.14
360-degree Feedback
Feedback derived from:
Supervisors
Suppliers
Customers
Peers
Workers themselves
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.15
Who should rate employees?
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.16
Employee (self rating)
Supervisors
Outsiders
Subordinates
Peers
Performance Appraisals: Advice for Managers
• Start by getting the big picture in mind
• Highlight the key issues you want to discuss
• Highlight the best evidence you have
• Give specific examples
• Use active listening
• Give employees time to prepare
• Start with your best performers
• Review the goals and objectives of each employee’s job
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.17
Managing for Improved Performance
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.18
Diagnosing the Poor Performer
Internal Causes:
Employee’s Skills
Employee’s Abilities
Employee’s Effort
Employee’s Personality
External Causes:
Task Difficulty
Resource Availability
Interpersonal Demands
Information Availability
Supervisors and employees rarely agree on the causes of poor performance!
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.19
Questions to consider...1. Has the individual performed at a higher level in the past?
2. Is the performance deficiency total, or is it confined to particular tasks?
3. How well do the individual’s capabilities match the job’s selection criteria?
4. Has the individual been properly trained in how to perform the tasks expected of him or her?
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.20
Recommendations for dealing with poor
performers...1. Recognize that even marginal performers are a source of gains in productivity for organizations
2. Recognize the need to implement positive turnaround strategies for dealing with marginal performers
3. Be ready to accept at least partial responsibility for the subordinate’s marginal performance
Lawrence Erlbaum Associates, Publisher, Copyright 2002
12.21
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