CHAPTER 6 Appraising and Rewarding Performance 2010 Cengage

CHAPTER 6 Appraising and Rewarding Performance © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Student Version Power. Point Presentation by Charlie Cook The University of West Alabama

Learning Objectives 1. Describe at least five performance appraisal techniques. 2. Explain what makes a performance appraisal legally defensible and discuss the importance of record keeping and confidentiality. 3. Explain how to design a performance appraisal system and explain the value of including employees and customers in the process. 4. Discuss performance measures and assessment criteria. 5. Discuss the “No Surprises” approach to supervision and performance evaluations. © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6– 2 2

Learning Objectives (cont’d) 6. Describe various types of employee compensation plans; distinguish extrinsic rewards from intrinsic rewards and list four rules for administering extrinsic rewards effectively. 7. Compare individualized and team rewards and provide examples of each. © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6– 3 3

Performance Appraisal • Cons Ø Appraisals can evoke strong negative emotions in both the appraisers and the appraised. Ø Appraisals are perceived as a waste of time, a source of lost productivity, and, if haphazard, a demotivator. • Pros Ø Appraisals can be effective and satisfying if systematically developed and implemented. Ø Appraisals can provide valuable feedback to employees from their supervisors. © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4

Performance Appraisal (cont’d) Goal Setting (MBO) Weighted Check Lists Written Essays Rankings and Comparisons Performance Appraisal Techniques Critical Incidents Multirater Appraisal Graphic Rating Scales Continuous Improvement Review (CIR) © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5

Mary recently met with her supervisor Nancy for her annual performance appraisal. During the meeting, Mary admitted that she had made a few mistakes because she was rushing too much. She agreed to slow down and check her work more thoroughly in an effort to improve. Mary kept the conversation confidential and did not mention it to anyone. The following week, one of Mary’s coworkers said to her, “I hear you agreed to slow down a little so you make fewer mistakes!” Of course, Mary is left to assume that Nancy must have discussed their conversation with others. (Continued on next slide) © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6

1. How do you think Mary feels? 2. What impact do you think this will have on the relationship between Mary and Nancy? 3. What do you suggest Nancy do to resolve this situation? © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7

Making the Appraisal System Relevant Employee Input Customer Input Cultural Sensitivity Performance Appraisal Goal Improving Productivity, Quality, and Key Organizational Outcomes © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8

Performance Measures • Performance Measures Ø Determine how an employee’s performance will be evaluated. • Types of Performance Measures Ø Quality Measures (How Good? ) v Are measures of the level of excellence of a product or service. Ø Quantitative Measures (How Many? ) v Are quantifiable results, such as productivity. © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9

The previous section suggests that supervisors should include a quality component to the performance evaluation to measure both productivity as well as quality. 1. Do you agree or disagree with this recommendation? Explain. 2. What are possible unintended consequences if a supervisor measures only productivity (quantity) without assessing quality? 3. What would happen if the supervisor evaluates only quality without regard for productivity (quantity)? © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10

Assessment Criteria • Assessment Criteria Ø Are the standards used to assess employee performance. • Effective Performance Criteria Ø Are based on standards for outcomes and behavior, rather than on personal traits or characteristics. Ø Are consistent with the organization’s mission, values, goals, and quality measures. Ø Assess both individual performance and individual contributions to team, department, and organizational objectives. Ø Are known and understood by employees. © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11

Performance Measures and Assessment Criteria Use of Quality and Quantitative Measures Choice of Individual and Group Assessment Criteria Performance Measurement Issues Use of Weighted Elements and Choice of Scale for Scoring Setting the Frequency of Performance Evaluation Who to Select to Conduct the Appraisal and Use of Self-Evaluation © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12

The “No Surprises” Approach to Performance Appraisals and Supervision • Open, timely, honest, and shared forms of communication are valued and expected part of the firm’s culture. Ø Employees readily share bad news and other information with supervisors. Ø Supervisors, in turn, share information and give fair notice and warning of their actions to employees (e. g. , the timing and delivery of annual performance appraisals). © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13

Employee Compensation and Rewards • Rewards Ø Are defined broadly as the material and psychological payoffs for performing tasks in the workplace. Ø Can, when properly administered, improve job performance and satisfaction. • Types of Rewards Ø Extrinsic rewards are given to individuals by others. v Pay raises, benefits, promotions, praise Ø Intrinsic rewards are self-granted rewards with internally experienced payoffs v Accomplishment, self-esteem, and self-actualization © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14

Employee Compensation Plans • Importance of Compensation Ø It is perceived as a universal motivator. Ø It is two-thirds of total business expenses. Ø It has significant legal and tax implications for the firm. Ø It’s becoming more flexible and variable to meet the needs of employers and the demands of a more diverse work force. © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15

Consider the following story from the airline industry, then answer the questions that follow. Something funny is happening in the aviation industry: Airlines are making money again. But while that’s good news for shareholders, it’s infuriating pilots and other employees who took pay cuts in the wake of 9/11. Nowhere are pilots as peeved as they are at American, where the airline’s 12, 000 -member Allied Pilots Association has declared war on management. The pilots’ chief complaint: Four years after they voluntarily gave up 23% of their pay along with other concessions to help stave off bankruptcy, top executives of American and parent AMR Corp. have received about a quarter-billion dollars in AMR stock, while employees got only small pay increases. With American poised to have one of its best years ever, its pilots say they just want to make the same as they did in 1992, adjusted for inflation. (Continued on next slide) © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16

1. One of American Airline’s executives made this statement about the pilots’ complaints: “Our strategic decisions kept the company out of bankruptcy and we deserve to be rewarded for it. ” How would you respond to this statement? 2. From an employee motivation standpoint, what role does reward equity play in this situation? © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17

Team-Based Versus Individualized Rewards • Team Rewards Ø Rewards given to a group of employees to recognize team-based goal attainment. • Resistance to Team Rewards Ø Concept of team rewards goes against the grain of an individualistic culture. Ø Poorly conceived and administered plans have given team-based pay a bad reputation. © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18

Consider the following quotes from a recent article on work/life balance, then answer the questions that follow. Employees are looking for more than a paycheck in today’s competitive work environment. Striking a balance between work and family life is a top priority, according to a recent survey. . It indicated that more than half of respondents cited flexibility as “very important” to overall job satisfaction. If you want to keep some of your most valuable players, it may be time to consider instituting family-friendly policies such as flex-time and telecommuting, human-resources experts say. (Continued on next slide) © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19

1. How do you plan to achieve work/life balance in your career? 2. Which is more important to you, more pay or more leisure time? Explain. 3. From a supervisor’s perspective, what are the pros and cons of fl ex-time and telecommuting? © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20

TERMS TO UNDERSTAND 360 -degree review assessment criteria behaviorally anchored rates scales (BARS) cafeteria compensation confidentiality continuous improvement review (CIR) equitable extrinsic rewards individualized rewards intrinsic rewards performance measures quality measures quantitative measures rewards self-evaluation team rewards © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21