APPRAISING AND REWARDING PERFORMANCE PREPARED BY ARLENE KRISTINE
APPRAISING AND REWARDING PERFORMANCE PREPARED BY: ARLENE KRISTINE JOY M. CLEMENTE MEM-CM
TOPICS OUTLINE: 1. Money as means of rewarding employees 2. Organizational Behaviour and Performance Appraisal 3. Economic Incentive Systems 4. Use of Wage Incentives 5. Profit Sharing 6. Gain Cash Plan 7. Skill Base Pay 8. Complete Program
19 TH TO 20 TH CENTURY v EMPLOYEES PRIMARILY WANT MONEY. v MONEY WAS BELIEVED A DIRECT MOTIVATION.
I. MONEY AS MEANS OF REWARDING EMPLOYEE MONEY § IS VALUABLE BECAUSE OF THE GOODS AND SERVICES THAT IT WILL PURCHASE. § THIS ASPECT IS ITS ECONOMIC VALUE AS A MEDIUM OF EXCHANGE FOR ALLOCATION OF ECONOMIC RESOURCES, HOWEVER MONEY ALSO IS A SOCIAL MEDIUM OF EXCHANGE. § SAVE IT, SPEND IT, OR GIVE IT AWAY GENEROUSLY. § IT IS AN INDICATION OF ONE’S EMPLOYEE STATUS RELATIVE TO THAT OF OTHER EMPLOYEE.
Application of the Motivational Models A useful way to think about money as a reward is to apply it to some of the motivational models such as, 1. DRIVES Achievement- oriented employees maintain a symbolic scorecard in their minds by monitoring their total pay and comparing it with that of others. Their pay is a measure of their accomplishments.
Application of the Motivational Models 2. NEEDS In the Herzberg model, pay is viewed primarily as a hygiene factor, although it may have at least short-term motivational value as well. Pay is most easily seen in its capacity to satisfy the lower-order needs. However, we can easily see how it relates to other levels as well, like Mark Mc. Cann’s esteem needs in the opening.
Application of the Motivational Models 2. NEEDS Expectancy theory Valence x Expectancy x Instrumentality = Motivation
Application of the Motivational Models 3. BEHAVIOR MODIFICATION Desirable and Undesirable Instrumentality Conditions
Application of the Motivational Models 4. EQUITY The employee’s approach to this complex problem is to make a rough type of costreward comparison, similar to the breakeven analysis that is used in financial assessments.
II. ORGANIZATIONAL BEHAVIOR AND PERFORMANCE Organizations require consistent APPRAISAL levels of high performance from their employees in order to survive in a highly competitive environment. Management by objectives (MBO) is a cynical process that often consists of four steps as a way to attain desired performance: 1. OBJECTIVE SETTING It is a joint determination by manager and employee of appropriate levels of future performance for the employee, within the context of overall unit goals and resources.
ORGANIZATIONAL BEHAVIOR AND PERFORMANCE APPRAISAL 2. ACTION PLANNING Participative or even independent planning by the employee as how to reach the objectives. 3. PERIODIC REVIEWS Joint assessment of progress toward objectives by manager and employee, performed informally and sometimes spontaneously.
ORGANIZATIONAL BEHAVIOR AND PERFORMANCE APPRAISAL 2. ANNUAL EVALUATION More formal assessment of success in achieving the employee’s annual objectives, coupled with a renewal of the planning cycle. PERFORMANCE APPRAISAL- plays a role in reward system. It is the process of evaluating the performance of employees, sharing that information with them, and searching for some ways to improve their performance.
III. ECONOMIC INCENTIVE SYSTEMS ECONOMIC INCENTIVE SYSTEM - INDUCE A HIGH LEVEL OF INDIVIDUAL, GROUP, OR ORGANIZATIONAL PERFORMANCE BY MAKING AN EMPLOYEE’S PAY CONTINGENT ON ONE OR MORE OF THOSE DIMENSIONS.
III. ECONOMIC INCENTIVE SYSTEMS ADVANTAGES OF INCENTIVES THEY INCREASE EMPLOYEE BELIEFS (INSTRUMENTALITY) THAT REWARD WILL FOLLOW HIGH PERFORMANCE. IF WE ASSUME, MONEY HAS VALENCE TO AN EMPLOYEE, THEN MOTIVATION SHOULD INCREASE.
III. ECONOMIC INCENTIVE SYSTEMS DISADVANTAGES OF INCENTIVES DIFFICULT TO ESTABLISH A FAIR BASIS FOR INCENTIVE PAY. SOME INCENTIVE SYSTEMS ARE COSTLY TO MONITOR, REQUIRING EXTENSIVE RECORD-KEEPING PROCEDURES.
IV. USE OF WAGE INCENTIVES MORE PAY FOR MORE PRODUCTION
V. PROFIT SHARING A SYSTEM THAT DISTRIBUTES TO EMPLOYEES SOME PORTION OF THE PROFITS OF BUSINESS, EITHER IMMEDIATELY, OR DEFFERED UNTIL A LATER DATE.
V. PROFIT SHARING DIFFICULTIES 1. Profits are not directly related to an employee’s effort on the job. 2. Employee must wait for their reward and this lengthy delay diminishes the impact. 3. Since profits are unpredictable, total worker income may vary from year to year. 4. Some union leaders have historically been suspicious of profit sharing. They fear that it would determine union loyalty, result in varied total earnings from company to company and weaken their organizing campaigns.
VI. GAIN CASH PLAN GAIN SHARING- Another useful group incentive. GAIN SHARING PLAN A program that establishes a historical base period of organizational performance, measures improvements, and shares the gains with employees on some formula basis.
VI. GAIN CASH PLAN BEHAVIORAL BASIS Gain sharing plans use several fundamental ideas from organizational behavior and are much more than pay systems. They encourage employee suggestions, provide an incentive for coordination and teamwork, and promote improved communication.
VI. GAIN CASH PLAN CONTINGENCY FACTORS The success of gain sharing is contingent upon a number of key factors, such as moderately small size of the unit, sufficient operating history on allow creation of standards, existence of controllable cost areas, and relative stability of the business.
VII. SKILL BASED PAY Also known as Knowledge-based pay or multi-skill pay. They rewards individuals for what they know how to do. ADVANTAGES They provide strong motivation for employees to develop their workrelated skills. DISADVANTAGES More skills, higher pay rate.
VIII. COMPLETE THREE SYSTEMS: PROGRAM BASE PAY MOTIVATES EMPLOYEES TO PROGRESS JOBS OF HIGHER SKILLS AND RESPONSIBILITY. PERFORMANCE REWARDS AN INCENTIVE TO IMPROVE PERFORMANCE ON THE JOB. PROFIT SHARING MOTIVATES WORKERS TOWARD TEAMWORK TO IMPROVE AN ORGANIZATION’S PERFORMANCE.
END… THANK YOU FOR LISTENING
- Slides: 24