Motivation and Performance Evaluation

Motivation and

Performance Evaluation

A Guide for Sustainable Entrepreneurs

SUSTAINABLE ENTREPRENEURSHIP PROJECT

Dr. Alan S. Gutterman

Motivation and Performance Evaluation:

A Guide for Sustainable Entrepreneurs

Published by the Sustainable Entrepreneurship Project (www.seproject.org) and

copyrighted © 2017 by Alan S. Gutterman.

All the rights of a copyright owner in this Work are reserved and retained by Alan S.

Gutterman; however, the copyright owner grants the public the non-exclusive right to

copy, distribute, or display the Work under a Creative Commons Attribution-

NonCommercial-ShareAlike (CC BY-NC-SA) 4.0 License, as more fully described

at http://creativecommons.org/licenses/by-nc-sa/4.0/legalcode.

About the Project

The Sustainable Entrepreneurship Project (www.seproject.org) engages in and promotes

research, education and training activities relating to entrepreneurial ventures launched

with the aspiration to create sustainable enterprises that achieve significant growth in

scale and value creation through the development of innovative products or services

which form the basis for a successful international business. In furtherance of its mission

the Project is involved in the preparation and distribution of Libraries of Resources for

Sustainable Entrepreneurs covering Entrepreneurship, Leadership, Management,

Organizational Design, Organizational Culture, Strategic Planning, Governance,

Corporate Social Responsibility, Compliance and Risk Management, Finance, Human

Resources, Product Development and Commercialization, Technology Management,

Globalization, and Managing Growth and Change. Each of the Libraries include various

Project publications such as handbooks, guides, briefings, articles, checklists, forms,

forms, videos and audio works and other resources; management tools such as checklists

and questionnaires, forms and training materials; books; chapters or articles in books;

articles in journals, newspapers and magazines; theses and dissertations; papers;

government and other public domain publications; online articles and databases; blogs;

websites; and webinars and podcasts.

About the Author

Dr. Alan S. Gutterman is the Founding Director of the Sustainable Entrepreneurship

Project and the Founding Director of the Business Counselor Institute

(www.businesscounselorinstitute.org), which distributes Dr. Gutterman’s widely-

recognized portfolio of timely and practical legal and business information for attorneys,

other professionals and executives in the form of books, online content, webinars, videos,

podcasts, newsletters and training programs. Dr. Gutterman has over three decades of

experience as a partner and senior counsel with internationally recognized law firms

counseling small and large business enterprises in the areas of general corporate and

securities matters, venture capital, mergers and acquisitions, international law and

transactions, strategic business alliances, technology transfers and intellectual property,

and has also held senior management positions with several technology-based businesses

including service as the chief legal officer of a leading international distributor of IT

http://www.businesscounselorinstitute.org/

products headquartered in Silicon Valley and as the chief operating officer of an

emerging broadband media company. He received his A.B., M.B.A., and J.D. from the

University of California at Berkeley, a D.B.A. from Golden Gate University, and a Ph. D.

from the University of Cambridge. For more information about Dr. Gutterman, his

publications, the Sustainable Entrepreneurship Project or the Business Counselor

Institute, please contact him directly at [email protected].

mailto:[email protected]

Motivation and Performance Evaluation

1 Motivation and Performance Evaluation

§1 Introduction

The level of contribution that an employee makes to company is a function of his or her

skills, knowledge and, not unimportantly, the extent of the effort that he or she is willing

to exert on behalf of the company while discharging job-related responsibilities. The

passion and enthusiasm that an employee brings to his or her job depends on whether or

not he or she is sufficiently motivated and managers seeking to motivate their employees

are faced with the challenge of creating and implementing strategies that induce

individuals, or groups of individuals each with their own distinctive needs and

personalities, to focus their energies and talents on achieving the goals and objectives of

the company as they simultaneously strive to achieve their own personal goals and

objectives. In order to be successful, managers must first gain a better understanding of

the basic individual needs of employees, which will vary depending on the circumstances

and change continuously as time goes by and employees go through different stages of

their careers, and then must create and implement programs and reward systems (e.g.,

monetary rewards such as wages and bonuses and non-monetary rewards such as

recognition among other employees and/or a sense of security and inclusion within the

workplace) that align the needs of employees with the strategic goals and objectives of

the company.

§2 Theories of needs of individuals in the workplace

There are a number of well-known theories that have been developed to identify and

explain the needs of individuals in the workplace. For example, Maslow believed that

there is a “hierarchy of needs” that must be satisfied in a particular order and that once a

need has been satisfied it no longer can be used as a motivating factor; correspondingly, a

“higher need” will not be an active concern for a person until he or she has sufficiently

satisfied each of the lower needs and thus it does not good to use higher needs as the

focus for motivation until the lower needs have been addressed. Not surprisingly, the

most basic needs are physiological and biological, including physical comfort on the job,

rest breaks, refreshments, and reasonable working hours. The next level includes safety

and security needs, including safe working conditions and compensation benefits. Once

the psychological and safety needs are satisfied, workers aspire to social needs, including

a sense of belonging and association with colleagues in the workplace. The fourth level

of needs is ego-based, such as promotion to jobs with higher status and responsibility and

praise and recognition from superiors. Finally, the highest order of needs are based on

self-fulfillment, including creative and challenging work duties and responsibilities and

opportunities to participate in decisions about how one’s job should be structured.1

1 A. Maslow, Motivation and Personality (New York: Harper, 1954). Maslow’s “hierarchy of needs”

actually extended beyond the workplace to all facets of individual existence and the levels, once again

running from “basic” to “higher” in successive fashion, could also be described as follows: first, psychological needs (i.e., breathing, food, water, sex and sleep); second, safety or security needs (i.e.,

security of body, livelihood, resources, family, health and property); third, social needs (i.e., friendship,

family, sexual intimacy, quality of life); fourth, esteem needs (i.e., self-esteem, confidence, performance,


2

McClelland’s “achievement motivated needs” theory was based on the belief that

individuals, particularly managers, developed needs for achievement, power, and

affiliation and that these needs could be used as the basis for motivation (the

“achievement motive”).2 Herzberg distinguished between “motivator” and “hygienic

factors and the list of motivating factors in his “motivation-hygiene” theory (sometimes

referred to as the “two factor” theory) was slightly longer and included achievement,

responsibility, recognition, advancement/promotion, creative and challenging work, and

the possibility of growth and fulfillment on the job, all of which are similar to Maslow’s

“higher” esteem and self-actualization needs. For Herzberg, factors such as salary, job

security, status, personal life, working conditions, benefits, relations with co-workers and

supervisors and company policies and administrative procedures were merely

"maintenance,” or “hygienic,” factors that needed to be satisfied to maintain morale but

which did not on their own serve as motivators for higher levels of performance and

commitment. His hygienic factors are similar to Maslow’s three lowest/most basic

levels—psychological, safety and social.

Herzberg believed that motivator and hygienic factors operated independently of each

other, hygienic factors could only be a source of dissatisfaction and only motivating

factors could have positive motivational effects on workers. Specific findings and beliefs

of Herzberg included the following: (i) people are made dissatisfied by a bad

environment (i.e., poor hygienic factors) but are seldom satisfied only by a good

environment; (ii) preventing dissatisfaction is just as important as encouraging motivator

factor satisfaction; (iii) individuals can be highly motivated in carrying out their work

while being dissatisfied with their work environment; and (iv) improvements in hygiene

have only short-term effects in removing satisfaction and hygiene needs quickly come

back to a starting point.3 While one could quarrel with the notion that salary is not a

motivating factor, particularly if it used as a reward for undertaking and completing

specified performance, these theories do provide a useful starting point for managers

looking to craft motivational programs.

Vroom proposed what is referred to as “Expectancy Theory”, which assumes that the

behavior and actions of a person will be based on his or her expectations regarding the

outcome or reward associated with choosing a specific behavior or action.4 The

performance of each person, and the conditions that can be expected to provide the

highest degree of motivation for him or her, are influenced by individual factors such as

achievement, respect from others); and fifth and finally, self-actualization needs (i.e., morality, creativity

and self-fulfillment) at the top of the pyramid. See also A. Maslow, “A Theory of Human Motivation”, Psychological Review, 50 (1943), 370-96; and A. Maslow, Maslow on Management (New York: Wiley,

1998). 2 D.C. McClelland, The Achieving Society (Princeton, Van Nostrand, 1961). McClelland also argued that

humans have a basic need to establish and exercise power and influence over others, which he referred to as

the “power motive”. See also D.C. McClelland et al, The Achievement Motive (New York: Appleton-

Century Crofts, 1953) and Power: The Inner Experience (New York: Irvington, 1975) and Human

Motivation (Cambridge, UK: Cambridge University Press, 1987). 3 See F. Herzberg, The Motivation to Work (New York: John Wiley & Sons, 1959).

4 See V. Vroom, Work and Motivation (New York, John Wiley & Sons, 1964).


3 personality, skills, knowledge and experience. The job for managers is to device systems

that align performance with outcomes (“rewards”) that are valued by employees. In order

to be successful managers need to understand the rewards desired by employees, ensure

that allocation of rewards is done fairly and provide employees with sufficient training

and resources so that they truly believe they can perform at the level necessary for earn

the rewards. The Expectancy Theory is sometimes referred to as the Valence-

Instrumentality-Expectancy Theory based on three variables or beliefs proposed by

Vroom.5 Simply put, the key issue with respect to “Valence” is whether the outcome is

of any value to the employee; the key issue with respect to “Instrumentality” is whether

the employee believes that the completion of certain specified actions will result in the

achievement of the desired outcome; and the key issue with respect to “Expectancy” is

whether the employee has a reasonable expectation that he or she will be able to complete

the required actions. For Vroom, the product of these three variables is the level or

intensity of motivation behind the employee’s behavior and actions.

§3 Motivational profile for technology workers

While the knowledge-based workers, scientists and engineers, are some of the key

competitive assets for technology-based businesses, the need to satisfy their primary

motivators creates a continuous challenge for senior management. In good times and

growing industries, qualified technology employees generally have a number of

alternative opportunities and will continuous be looking for challenging projects that

offer professional recognition. The real risk that these workers may leave the company

for what they perceive to be better employment means that management must take

special steps to create and maintain job satisfaction. Failure in this area may mean that

the company is unable to respond quickly to changes in the marketplace since the

company lacks the institutional knowledge to quickly adapt its technology base.

Moreover, even though departing employees are not permitted, by law and contract, to

misappropriate the know-how of their former employers, it is inevitable that valuable

learning and experience will escape to competitors.

Technology-based companies often consciously adopt corporate cultures that attempt to

be in tune with the requirements of their science and engineering workers. For example,

policies and procedures are deliberately informal and flexible and an effort is made to

generate the requisite level of excitement that motivates these types of employees.

However, unexpected crises caused by changes in the marketplace and other competitive

factors may call for dramatic changes in the way the company conducts its business and

these changes may quickly destroy morale. As such, senior management must remain

attuned to indicators of the morale of the company’s technical staff and be prepared to

explain the reasons behind changes in duties and responsibilities and operational

5 Organ and Bateman described Vroom’s theory as follows: “[m]otivation to perform a behavior is an

algebraic sum of the products of the values of the possible outcomes of the behavior times the beliefs

regarding the likelihood that the behavior will lead to these outcomes . . . the valence of an outcome is seen

to be determined by the values of the ultimate results that can come from the outcome times the perceived

likelihood that the outcome will lead to the results.” D. Organ and T. Bateman, Organizational Behavior –

An Applied Psychological Approach (Homewood, Ill.: BPI Irwin, 1986), 118.


4 priorities. Also, a technology-based culture may, as the company grows and matures,

have to give way to a heightened focus on market-driven requirements. As this occurs,

technologists may grow disenchanted with selection of development projects that are

farther away from the “cutting edge” ideas on which the company was originally based.

A good deal of the recent work regarding motivational factors in the workplace has

focused on the unique motivation profile for employees of technology-based firms,

particularly smaller companies, and whether there are special requirements that must be

recognized and satisfied with respect to HR management for these enterprises. In

general, studies have found that the organizational structure for small technology-based

firms is generally informal, egalitarian and in a state of constant change. As for

individual employees working with these types of companies, several studies have

identified the following as likely motivating factors, at least for technology-based

workers at small- and medium sized firms: money; comfortable life style; recognition and

autonomy; and high quality of working environment measured in terms of amenities and

attractive physical surroundings. While these are the norms, they are not hard and fast

rules for all situations. Typically, employees may be willing to forego some money and

other comforts during the start up stage if the work is exciting and he or she is given the

necessary autonomy. In the long run, however, the company must be able to provide an

appropriate balance of both money and autonomy to maximize employee satisfaction and

reduce the rate of turnover in the technical area. Factors that are less appealing to these

types of workers include job security and power and influence over others.6

Scientists and engineers are notorious for jumping quickly from job to job, particularly

when market conditions are booming and other firms are willing and able to offer more

money and amenities. Surveys indicate that the main reason these employees change

jobs is for a higher salary, more interesting and challenging work and more desirable

working conditions. These factors appear to be universal, applicable to companies in

Silicon Valley and in the London and Cambridge areas of the United Kingdom for

example, and continue to have an impact as companies grow from a small group of

employees to as many as 250 employees.7

Be Aware of Myths about Millennials in the Workplace

As “millennials”, workers born between 1980 and 2000 and sometimes referred to as “Generation Y”, have

become the largest group in the US workforce, consultants and pundits have built a cottage industry on

providing advice on why and how millennials need to be treated differently in the workplace. Books,

articles and speeches paint a picture of a generation disgusted and disenchanted with the old ways of doing

6 See, e.g., R.J. Parden, “The Manager’s Role and the High Mobility of Technical Specialists in the Santa

Clara Valley,” IEEE Transaction on Engineering Management, Vol. EM-28, 1, (1981); E.J. Malecki, “Hope or Hyperbole? High Tech and Economic Development”, Technology Review, October 1987. The lack of interest in power and influence confirms the basis for the general feeling that many scientists and engineers,

including founders, are not suited for taking on, or expanding or formalizing their existing, managerial

responsibilities as the business grows. 7 See, e.g., R.J. Parden, “The Manager’s Role and the High Mobility of Technical Specialists in the Santa

Clara Valley,” IEEE Transaction on Engineering Management, Vol. EM-28, 1, (1981); A. Garden,

“Turnover Reasons of Software Employees in a Range of Small High Tech Companies,” IEEE Transactions on Engineering Management (1990).


5 things and the perceived career aspirations and paths of their parents. An article in The Economist

discussing “Myths about Millennials” in the workplace reported that we are being continuously told that

because of the way they were educated and their participation in social media, millennials are natural

collaborators (“team players”) who reject mindless competition and striving to get ahead. Other important

things that companies are supposed to take as truisms about Generation Y include their antipathy to

careerism and “being managed” and their need to sure that the work they are doing is meaningful,

interesting, challenging and socially responsible.

All of this noise has pushed companies to consider new ways of enticing job candidates and treating

workers once they have arrived and the upturn in emphasis on and funding for corporate social

responsibility initiatives is not necessarily a bad thing. However, The Economist urged companies to be

wary of what the newspaper referred to as “dubious generalizations about younger workers” and described

the results of surveys conducted by CEB, a consulting firm that asked questions of 90,000 US workers each

quarter, and Deal and Levenson, who studied 25,000 people in 22 countries. Noting that the data collected

by Deal and Levenson led them to argue that generalizations about millennials are “inconsistent at best and

destructive at worst”, The Economist article suggested that a more realistic picture of Generation Y might

include the following:

Competitive: The responses from millennials themselves indicated that as a group they were more

competitive than the baby-boomers (workers born from 1946 to the mid-1960s). 59% of the

millennials (as opposed to 50% of the baby boomers) agreed that competition was “what gets them up

in the morning” and 58% of them (as opposed to 48% for other generations) compared their

performance with their peers.

Individualists, not collaborators: A lifetime of continuous communication with other millennials on

their smartphones did not prevent millennials from being much more distrustful of their peers’ input at

work than other generations.

Seeking career opportunities: Rather than being anti-careerists, millennials outpolled other generations

by a margin of 33% to 21% when asked whether “future career opportunity” was among their top five

reasons for selecting a particular job.

Not that hot on corporate responsibility: 35% of the millennials did indicate that corporate social

responsibility (“CSR”) was very important to them; however, the issue resonated more deeply with the

baby-boomers (41% of which said that CSR was very important to them).

Not really so difficult to manage: 41% of the millennials in a survey of 5,000 workers done by Deal

and Levenson agreed that “employees should do what their manager tells them, even when they can’t see the reason for it,” compared with 30% of the respondents from other generations.

Preference for face-to-face feedback: While millennials were adept at and comfortable with

conducting many types of communications digitally, more than 90% of those surveyed were clear that

they wanted “face time” with their managers when the subject was evaluation of their performance and

their career plans.

The article also pointed out that reports that millennials were more eager and willing to change jobs did not

necessarily mean that they were different from their parents since younger people have always been more

likely to move around more frequently as they learned more about their interests and continued their search

for a position that was right for them and their skills. In addition, the apparent willingness uncovered in the

surveys of millennials to take guidance from their managers and the hunger of millennials to get face-to-

face feedback might also be an indication that millennials, like most workers who have passed through the

same age group in the past, are aware that they still need help from others with more experience on

“learning the ropes”. In fact, The Economist summed it all up as follows: “The most striking thing about

the research data compiled by the likes of CEB and the Centre for Creative Leadership is how much

workers of different generations have in common. They want roughly the same things regardless of when

they were born: to be given interesting work to do, to be rewarded on the basis of their contributions and to

be given the chance to work hard and get ahead.” Organizations and their managers would do well to take

notice of hard data before throwing away all of the motivational tools they have used in the past and should

sit down with the millennials in their workplace and talk with them to sort out myths, understand their

expectations and explain the needs of the organization.


6

Sources: “Schumpeter: Myths about Millenials—Businesses should beware of dubious generalizations

about younger workers”, The Economist (August 1, 2015), 60 (also available online at

http://www.economist.com/news/business/21660110-businesses-should-beware-dubious-generalisations-

about-younger-workers-myths-about). Among the commentaries and other sources cited in the article were

Tamara Erickson, Plugged In” The Generation Y Guide to Thriving at Work (Harvard Business Review

Press, 2008), CEB (www.cebglobal.com), Jennifer Deal of the Center for Creative Leadership and Alec

Levenson of the University of Southern California. See also C. Marston, “Myths about Millennials: Tips

for Managers about Retaining Millennials”, About Money,

http://humanresources.about.com/od/managementtips/a/millennial_myth.htm [accessed August 10, 2015].

§4 Guidelines for motivating employees

The same surveys taken regarding the reasons that technology-based employees leave

their positions also provide guidance regarding various factors that seem to be important

in increasing the chances that those employees will be motivated and interested in

continuing with the company. One study of employees at a small software company in

the United Kingdom found that the average expected duration of employment, from the

employee’s perspective was about five years and that the likelihood that an employee

would stay with a company increased with the presence of certain working conditions

including a broad range of tasks or activities; challenging/interesting work and

recognition for good performance; opportunities for advancement; opportunities for

personal growth; and a sense of making a real contribution to the success of the

company.8 Obviously, there is more to each factor than meets the eye. For example,

while a broad range of activities is generally considered to be a positive factor, the

activities must be a good fit for the skills and interests of the employee. This dictates

caution in asking engineers to take on customer liaison tasks for which they are not well-

suited and which divert their attention for other tasks that they believe offer greater

opportunities for challenge and personal growth. Other surveys have reached similar

conclusions and highlight the importance of autonomy, interesting and rewarding work,

challenging assignments and opportunities for training and development as important

factors in retaining professional employees in the high technology environment.9

Based on various surveys regarding employee satisfaction and motivation the following

general recommendations can be regarding effective management practices:

Salaries and benefits offered by prospective competitors should be constantly

monitored and adjustments made to the company’ compensation programs to ensure

that salaries and benefits paid to key employees fall within the top quartile.

Build efficient and effective work groups and teams dedicated to achievement of

common goals and objectives. This allows managers to capitalize on the desire of

employees for belonging and respect and create opportunities for employees to be

mutually supportive and loyal to one another, the team, and the company.

8 A. Garden, “Turnover Reasons of Software Employees in a Range of Small High Tech Companies,” IEEE

Transactions on Engineering Management (1990). 9 M.S. Turbin and J.G. Rosse, “Staffing Issues in the High Technology Industry”, in L.R. Gomez-Mejia and

M.W. Lawless (Eds.), Organizational Issues in High Technology Management (Greenwich, CT: JAI Press,

1990), 227-241.

http://www.cebglobal.com/

http://humanresources.about.com/od/managementtips/a/millennial_myth.htm


7 Job expectations should be carefully defined so that employees can understand what

is required and can create linkages between activities and their own personal

motivational needs. Any ambiguity or uncertainty in job requirements can lead to

confusion and problems with morale.

Job assignments and activities should be continuously evaluated to determine whether

employees have the requisite opportunities for interesting and challenging work and

jobs should be redesigned in order to provide employees with new challenges on a

regular basis. This process can include the use of special assignments and also

provides opportunities for managers to begin to delegate certain of their tasks to

subordinates to enrich their job experience and improve their skills and enlarge their

scope of responsibilities.

Managers should be trained and encouraged to get to know their employees at a

personal level and become genuinely interested in how those employees perceive

their jobs and the impact of their activities on the success and progress of the

company. Managers should also ensure that objective measures of job performance

and professional development are used and communicated to employees.10

Employees should be encouraged to keep up with new developments in their field and

resources should be made readily available to support ongoing training and education.

Managers should schedule regular face-to-face meetings with the employees that they

supervise, as opposed to reliance on more formal and impersonal communications11

, and

should seek to build trust among employees and consistently evaluate, and reward or

penalize, employees based on criteria that are consistent with the values, mission and

strategic goals of the company.

10

See P. Lencioni, The Three Signs of a Miserable Job: A Fable for Employees (And Their Managers (San

Francisco: Jossey-Bass, 2007). Lencioni argues that there are three signs of employee unhappiness: the

first is “anonymity”—the feeling by an employee that his or her supervisor doesn’t really know or care about the employee at a personal level; the second is “irrelevance”—the feeling that the job simply doesn’t matter; and the final sign is “immeasurability”—a feeling of lack of control caused by the absence of

objective measures of job performance and professional development and the need to rely on the

unpredictable whims of others to learn just what is considered to be successful behavior within the

company. Not surprisingly, Lencioni believes that the three signs are closely related—as companies grow

people more distance develops between people leading to a growing sense of anonymity; then, as people

begin to lose touch with one another they get less and less feedback on the quality and importance of their

work, which leads to the feeling of immeasurability; and, finally, as people lose track of how their work fits

into the total picture they gradually begin to feel irrelevant. 11

One area where managers need to be careful about is communicating with their employees via e-mail.

Research by Kristin Byron, the author of “Carrying Too Heavy a Load?: The Communication and Miscommunication of Emotion by E-Mail,” which appeared in the Academy of Management Review in January 2008, concluded that that e-mail messages are consistently perceived by recipients as being more

negative than the sender intended and even e-mails that the sender wrote to convey a positive message are

often misinterpreted by the recipient as more neutral. The lack of formality associated with e-mail—short

terse sentences, misspellings, and no opening or closing to the message—contributes to the perception that

messages are more negative than they are intended to be. This type of feedback is a reminder to managers,

and everyone in the workplace, that face-to-face contact or a phone call should be used at appropriate times

to make sure that there are no misunderstandings even if the person sending the e-mail thinks that the

message is clear and concise. Moreover, the personal touch is a good way to reduce distance and avert the

problems of anonymity discussed in the previous note. See

http://www.fastcompany.com/magazine/118/theres-a-message-in-every-email.html


8 In addition to clarifying the performance requirements for each job, management must

also provide employees with regular and continuous feedback on their performance and,

when appropriate, concrete and relevant recognition and rewards for their performance

when warranted. The various theories that have been developed regarding motivational

needs play an important role at this stage, since presumably the reward must actually be

valued by the employee in order to serve as a motivating factor. For example, if an

employee is most concerned about recognition within the workplace for his or her efforts,

it is unlikely that financial rewards alone will have the desired motivational effect. On

the other hand, other employees may prefer financial incentives as opposed to non-

material rewards.

Management should also adopt policies and practices that can address some of the more

subtle reasons for employee dissatisfaction. For example, even when salaries and other

working conditions are considered to be adequate, many employees are reluctant to

remain with a small company when they have doubts regarding the competence of senior

management or the direction that the company is being taken. Since these doubts are

often based on perceptions and incomplete information, management should regularly

and clearly communicate with all employees regarding the current status of company

operations, the direction the company intends to go and the underlying reasons for those

decisions. The communication process on company progress and direction may be

enhanced through direct participation by senior managers in training and education

presentations for employees. Management should also take the opportunity to use

communications as a way to reinforce the most common cultural aspects of successful

technology-based firms, which are innovation, attention to customer needs and an

openness to change. However, careful consideration should be given the volume and

type of information regarding company performance that can, and should, be made

available to all employees. Obviously there are risks with widely disseminating certain

information as it may fall into the wrong hands regardless of all attempts by the company

to limit unauthorized use; however, on balance an open communications policy can

provides by benefits through educating all employees about the direction the company is

taking. For example, companies should consider sharing information regarding new

customers and larger orders from existing customers.

Emerging companies, as well as many larger and relatively mature firms, often attempt to

satisfy the needs of their innovative workers by actively promoting opportunities to

engage in entrepreneurial activities. While entrepreneurial behavior is to be encouraged,

companies should also establish certain disciplines in its employees that can become the

basis for assessment and planning in the future as the company grows. For example,

employees may be required to prepare and submit, on a regular basis, reports that

describe their performance since the last report and their specific goals and objectives for

the future. Goals and objectives should be both short-term, as in those activities that are

to be completed within the next week or month, and long-term. When asking for long-

term goals and objectives, management can and should encourage employees to be

ambitious and should also seek information on the resources the employees believes

might be needed in order to meet these goals and objectives.


9 Work-Life Balance Programs: Challenges and Opportunities In an op-ed article appearing in The New York Times in August 2015 Weisberg discussed a “new raft of

‘perks’” announced with great fanfare by private equity firms and well-known businesses such as IBM,

Facebook and Apple that have been framed as an effort to accommodate the needs of working mothers and

women who want to be mothers and maintain their fast-paced career paths. Working women with

newborns now have opportunities to have their companies pay for both their baby and a nanny to tag along

on business trips during the first year after the baby is born and companies are also willing to ship home

breast milk pumped on a work-related junket. Companies have also implemented programs for

reimbursement of costs incurred by employees who want to freeze their eggs so that they concentrate on

their jobs but keep open the option of getting pregnant in the future.

While Weisberg conceded that progress has been made on providing support for working mothers, she

pointed out that while most married workers are dual-income couples, a majority of business leaders, about

80% of whom are men, are not significantly involved in providing care for their children and are able to

rely on spouses who do not work full-time outside of the house. Weisberg argued that this situation makes

it difficult for male business leaders to understand the multiple roles that most of their employees,

particularly women, have to fill it they want to have and support a family and advance and thrive in their

careers. Research showing that giving power to people reduces their ability to appreciate the perspective of

others only exacerbates the problem.

Weisberg described several surveys that illustrate the challenges associated with effectively implementing

work-life balance policies. For example, a survey of over 1,000 men and women in various stages of their

careers conducted by Bain & Company uncovered “a deeply ingrained ‘ideal worker’ model” in which the

most important characteristics for promotion were “maintaining a high profile in the organization, and an

unwavering commitment to long hours and constant work.” As for stubborn adherence to traditional

gender roles, while 51% of the respondents in a Pew research survey believed that children were better off

if their mother stayed home to care for them, just 8% of the respondents said that children would be better

off if their fathers stayed home. Another study of close to 1,000 male managers found that “men in

traditional marriages are more likely to have negative attitudes toward women in the workplace” than men

in dual-income marriages and rely on their own personal beliefs and marriage structures when they evaluate

work-life policies in the workplace.

The bottom line for Weisberg, a senior vice president of the Families and Work Institute at the time the

article was written, was that the perks described above were not enough to achieve the work-life balance

eluding many women and men in the workplace and that leaders needed to embrace and publicly practice a

new set of behaviors that break down the long-standing ideal worker paradigm and empowers people at all

levels of the organizational hierarchy to get their work done effectively, remain on their chosen career

paths, and confidently step away from their jobs at a reasonable time without guilt or angst to be

meaningfully and fully present for their families.

Many companies have adopted work-life policies that are less dramatic than paying for traveling nannies

and storing eggs: flextime, telecommuting and other types of working remotely flexibility, paid leaves for

parents of newborns, job switching flexibility and childcare subsidies. These are certainly positive steps

and a global study of management practices and work-life balance practices involving 732 medium-sized

manufacturing firms in the US, France, Germany and the UK found that the best managed firms tended to

also have the most progressive work-life policies. While the same study failed to uncover a positive

correlation between implementation of such policies and high productivity after adjusting for quality of

management, other surveys have provided support for the proposition that businesses that are able to

effectively address and management work-life balance issues will see significant increases in productivity

among their workers.

Weisberg is one of many who continue to push for changes in organizational culture so that work-life

balance coupled with unfettered access to advancement opportunities is embedded among the values and

norms of the organization and its members. In many cases, adoption of work-life policies is a response to


10 employee requests or an attempt to remediate problems that have already arisen due to challenges that

employees have encountered juggling their personal and professional lives. Rather than being reactive,

companies should proactively implement reasonable work-life policies that are responsive to the specific

needs of their target human resources pool. The best way to approach this is for the founders of the

company to explicitly focus on the type of experience they want workers with families, both women and

men, to have if they choose to come to work for the company. This means going beyond the usual

elements of the employment relationship—salaries, bonuses, insurance benefits, stock options—to consider

the full palette of professional and personal needs of the employee.

Founders should consider that surveys have consistently shown that employees attach great importance to

work-life balance, second only to compensation, and that one in five workers would be willing to give up

5% of their salary in exchange for the flexibility to work offsite one or two days a week. Another

important factor to consider is that companies that have embraced work-life balance policies have enjoyed

higher levels of employee satisfaction and retention, bringing stability to the workplace and allowing firms

to retain valuable employees who have built up firm-specific knowledge and experience that would be

difficult and expensive to replace. Work-life policies are a natural extension of very real values with an

organizational culture—a sense of familial connection in the workplace, loyalty and mutual respect and

understanding—and thus must and should be nurtured from the day that the company is launched.

Sources: A. Weisberg, “What Flying Nannies Won’t Fix”, The New York Times (August 24, 2015), A21;

N. Bloom, T. Kretschmer and J. Van Reenen, “Work-Life Balance, Management Practices and

Productivity” (April 2006); Work-Life Balance Programs Benefit Employers and Employees,

http://www.constangy.com/firm-news-314.html [accessed September 14, 2015]; and The Society of Human

Resource Management, Workplace Flexibility in the 21st Century (2008).

§5 Improvement of motivation by building connections

A study published by Deloitte Research12

explored the interesting issue of how to build

“connections” between people within companies that will provide the highest return in

terms of productivity and innovation. Managers have long recognized the importance of

communication and collaboration between employees, particularly when companies are

becoming more global and employees who need to work together are located in distant

locations. For example, companies often strive for teamwork through the creation of

project teams13

and make substantial investments in information technology resources

that facilitate rapid communication and information sharing. However, Deloitte claimed

that there are certain types of connections that are more valuable than others and argued

that companies must recognize and support three very different kinds of connections with

their organizations—connections with other people; connections with a common and

worthwhile company purpose; and connections with necessary resources. A few specific

recommendations in this area follow:

Give managers the time that they need to engage in networking activities and

communications and encourage all employees to create and maintain networks and

relationships within the company to learn more about their colleagues and share new

ideas that can ultimately be used to enhance company performance. This can be done

12

See Deloitte Research, “It’s 2008: Do You Know Where Your Talent Is?: Connecting People to What

Matters”, at http://www.deloitte.com/dtt/cda/doc/content/VE_Consulting_HC_connect_Feb07.pdf 13 For discussion of creating and managing project teams, see “Management: A Library of Resources for

Sustainable Entrepreneurs” prepared and distributed by the Sustainable Entrepreneurship Project

(www.seproject.org).

http://www.constangy.com/firm-news-314.html


11 by making new networking tools, such as video and various forms of e-

communications, readily available; however, be sure that employees understand the

need to keep their networking relationships to a manageable level of the time will

cease to be effective.

Build the connection with a sense of purpose by making an effort to provide

employee with fulfilling job activities and opportunities to expand and use their

talents. This means implementing focused and continuous enrichment programs that

are designed to prepare employees for new challenges as opposed to simply training

them to do their current jobs more quickly and efficiently. This approach can reduce

turnover and keep motivation within the workforce at higher levels.

Make sure the employees have easy access to the information that they need to

perform their jobs. This means investing in technology that allows employees to

work efficiently with delays caused by waiting on others to provide answers or data.

Connection to resources goes beyond access to information to include access to the

support and time that employees need to learn, think, rejuvenate and collaborate.

This means assisting employees in overcoming personal challenges that may prevent

them from focusing on work, such as finding suitable daycare for their children, and

making sure that time is set aside for them to tinker with some of their own ideas for

products, services or processes that may ultimately provide value for the company.

Office layout decisions should be made with an eye toward creating spaces for

collaboration as well as areas where employees can go to be free of disturbances so

that they can concentrate on a specific problem or idea.

§6 Performance evaluations

According to Kishita, a personnel evaluation system provides key support for several

other elements of any comprehensive human resources management system.14

For

example, evalution is necessary in the context of employment management decisions and

activities including recruiting and assignment, employee development and retirement or

dismissal. Personnel evaluation tools are also used in managing working conditions

including establishing the place and time for work and the content of benefit programs.

Finally, as described in more detail in this section, personnel evaluation systems measure

and evaluation “performance” and the results are used for administering a reward

management system that includes setting wages, awarded bonuses and raises, promotions

and non-monetary recognition.

Several different types of personal evaluation systems have been identified and

described.15

The first type focuses on “inputs”, specifically the efforts and abilities of

employees in relation to their assigned job responsibilities. Input-based systems are

generally accompanied by ability-based reward systems. The second type of personnel

evaluation system is “job-oriented” and focuses on the specific tasks associated with a

particular job and rewards employees based on the value that is ascribed to that job.

Finally, performance-oriented evaluation systems tie compensation of the employee to

14

T. Kishita, “The HRM of Japanese Firms in the Days to Come of Global Competition” Research and Practice in Human Resource Management, 14(1) (2006), 29-48. 15

K. Imano and H. Sato, Introduction to personnel management (Tokyo: Nihon Keizai Shinbunsha, 2002).


12 specific performance measures (e.g., the level of sales revenues achieved by sales

representatives). Regardless of which type of personnel evaluation system is used the

main functions should include measuring how employees are currently fulfilling their job

duties and responsibilities; establishing strategies for improving the performance of

employees in the future; identifying any present or future problems relating to the

employee's performance; and determining whether the employee, his or her manager and

the company are benefiting from the activities performed by the employee.

The procedures used for conducting a performance evaluation, sometimes referred to as

an “appraisal,” will vary depending upon the functional activities of the workers being

evaluated, the educational and technical background of the workers and the industry in

which the company is operating. For example, the following observations were collected

from a survey of the performance evaluation practices relating to research and

development personnel among a group of high technology firms:

Most companies had some form of formal performance evaluation system for

evaluating scientists or engineers in the research and development function and in

most cases the evaluation were used for both administrative (e.g., salary and

promotion) and developmental purposes.

In most cases, companies used one standard system for evaluating all of the

employees in the research and development function, as opposed to designing

customized systems for different occupational groups within the department.

Managers and supervisors responsible for conducting evaluations typically had some

formal technical training in the areas in which they evaluated. In general, the primary

source of evaluation information was the person responsible for immediate

supervision of the employee; however, a small number of companies also relied on

some form of employee self evaluation in conjunction with supervisor input.

Some form of goal setting, or “management by objectives,” was the predominant

method used to evaluate performance. Specific quantitative and qualitative measures

most often mentioned by respondents included actual work accomplished (e.g.,

progress achieved, projects completed or quantity of work done), quality of work,

professional/technical knowledge, creativity and management skills.

In general, performance evaluations were perceived as being an important factor with

respect to compensation and promotion decisions by the companies included in the

survey; however, a significant minority expressed concern that organizational politics

often overrode the results of the appraisal system with regard to promotions and transfers.

The most common criticisms of performance evaluation were that managers and

supervisors did not use the system objectively and that it was difficult to formulate and

apply quantitative measures of work performance.16

Several guiding principles should be borne in mind when creating a performance

evaluation program and communicating the results of the evaluation to employees. First,

there should be mutual respect between the manager delivering the results of the

16

G.R. Ferris and M.R. Buckley, “Performance Evaluation in High Technology Firms”, in L.R. Gomez-

Mejia and M.W. Lawless (Eds.), Organizational Issues in High Technology Management 243-63 (1990).


13 evaluation and the employee. Second, while constructive criticism is often necessary in

the evaluation process to identify and remedy shortcomings, an effort should be made to

emphasize support, recognition, and encouragement. Third, managers providing the

evaluation must have demonstrable and accepted competence in the areas covered by the

evaluation. In turn, employees must be able to accept legitimate criticism and feedback

on their performance and recognize that these communications provide them with

opportunities to improve and enhance their work experience. Companies in the survey

referred to above generally delivered the results of the performance evaluation process

through an interview with the supervisor and preparation and filing of a formal appraisal

report. A common practice is for the supervisor and employee was to engage in an open

discussion of the evaluation and the employee's performance during the interview and for

the supervisor to make notes on a working copy of the report that would then be signed

by both parties as a record of their communications and agreement with the content.

According to a February 2016 article in The Economist on the then-current state of

performance reviews in the workplace, Mercer, a consulting firm, surveyed 1,000

employers in 2013 in more than 50 countries and found that 94% of them undertook

formal reviews of workers’ performance each year, 95% set individual goals for

employees and 89% calculated an overall score for each worker and linked pay to these

ratings.17

These findings conflicted with anecdotal claims that companies were

abandoning performance reviews; however, while reviews appeared to remain a

significant part of the workplace there are indications that the process is being modified.

The Economist noted four popular changes: companies are putting aside the practice of

“ranking and yanking”, which calls for the annual firing of those employees with the

lowest scores on performance reviews each year; reviews are being done more

frequently—annual reviews are being replaced by quarterly, or even weekly, evaluations

and discussions between employees and managers; pay and performance reviews are

being separated; and review conversations include more emphasis on discovering and

developing employees’ potential as opposed to rating their prior work. The Economist

cautioned that while more frequent reviews sounded like a good idea, the best managers

should be giving feedback continuously and adding more formal meetings to the workday

may be a time waster. The Economist also observed that an important part of assessing

performance is comparison to peers, especially when making decisions about promotions

and rewarding extraordinary performance with bonuses. The Economist was also puzzled

about how compensation decisions could be made fairly and rationally if performance

was not one of the factors to be considered.

The Economist pointed out that some formal system of performance reviews will likely

remain in place to protect employers against lawsuits from employees claiming they were

wrongly terminated or denied promotions or bonuses. In those instances, employers need

and want to be able to point to clear and robust criteria for the decisions and assessment

systems that are more “touch-feely” may not provide employers with the insurance they

need and may mislead or confuse employees about their prospects with the company.

However, even when companies use formal assessment systems documented with

17

“The measure of a man: reports of the death of performance reviews are exaggerated”, The Economist (February 20, 2016), 59.


14 seemingly objective criteria, the reality is that managers remain subject to lobbying and

have their reasons for inflating ratings given to their subordinates (i.e., poor performance

ratings may be perceived as a sign of weakness in the manager’s own leadership skills).

Experts recommend that more time be invested in training managers about how to

conduct reviews and holding them accountable for overly generous or poorly supported

ratings. Peer review of managerial assessments has been implemented in some

companies and managers have been urged to move more quickly to address indications of

poor performance before the situation with the particular employee reaches a crisis.

Performance reviews should also be recognized for the value they can provide in

measuring employee development over an extended period and helping companies place

employees into positions that are best suited for their strengths and talents while still

meeting the company’s own overall strategic goals and objectives.

References and Resources The Sustainable Entrepreneurship Project’s Library of Resources for Sustainable Entrepreneurs relating to

Human Resources is available at https://seproject.org/human-resources/ and includes materials relating to

the subject matters of this Guide including various Project publications such as handbooks, guides,

briefings, articles, checklists, forms, forms, videos and audio works and other resources; management tools

such as checklists and questionnaires, forms and training materials; books; chapters or articles in books;

articles in journals, newspapers and magazines; theses and dissertations; papers; government and other

public domain publications; online articles and databases; blogs; websites; and webinars and podcasts.

Changes to the Library are made on a continuous basis and notifications of changes, as well as new

versions of this Guide, will be provided to readers that enter their names on the Project mailing list by

following the procedures on the Project’s website.

08.2017

https://seproject.org/human-resources/

Documents

Motivation and Performance Evaluation