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CH-9-Performance-Management-Rewards

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0% found this document useful (0 votes)
32 views49 pages

CH-9-Performance-Management-Rewards

HBO

Uploaded by

colasp25
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHAPTER 9

PERFORMANCE
MANAGEMENT AND REWARDS
PERFORMANCE MANAGEMENT AND REWARDS

• How individuals and groups do their jobs is the


main concern of those managing organizations. It
is easy to predict what will happen to organizations
when members are not performing effectively and
efficiently. The task of management is to make
sure that every member is doing what is expected
of them. How management will go about doing this
task is the aim of performance management.
WHAT IS PERFORMANCE MANAGEMENT ?

• Performance management refers to the


procedures and systems designed to
improve employee outputs and
performance, often through the use of
economic incentive systems.
APART FROM ECONOMIC INCENTIVES, THE OTHER MEANS USED TO
IMPROVE EMPLOYEE PERFORMANCE ARE:

Apart from economic incentives, the other means used to improve employee performance are:
• 1. goal setting
• 2. streamlined organizational structure
• 3. better technology
• 4. new arrangements of working schedules
• 5. high involvement of employees
• 6. better motivation of employees
STAFFING

Effective performance begins with getting the right people, and then providing them with
the right training and the right environment. To achieve this, the staffing function of the
organization must be well implemented.
Staffing refers to the HR planning, acquisition, and development aimed at providing the
talent necessary for organizational success The staffing process consists of the following:
1. job analysis
2. Recruitment
3. selection
4. socialization
JOB ANALYSIS

The process of staffing starts with an understanding of the positions or jobs for which
individuals are needed in the organization. Job analysis is a technical procedure used
to define the duties, responsibilities, and accountabilities of a job.
The results of job analysis are very useful in:
1. preparing job descriptions
2. evaluating and classifying jobs
3. training and career development
4. performance appraisal
5. other HR aspects
After job analysis, the next step in the staffing process is the drawing of
people to apply for the various positions identified. This step is called
recruitment and it may be defined as a human resource management
practice designed to locate and attract job applicants for particular
positions,
Recruitment involves the following:
1. advertisement of a position vacancy
2. preliminary contact with potential job candidates
3. preliminary screening to obtain a pool of candidates
INTERNAL RECRUITMENT

It is a process for attracting job applicants from those currently working for the firm.
The advantages of internal recruitment are:
1. It is good public relations.
2. It builds morale.
3. It encourages good individuals who are ambitious.
The disadvantages of internal recruitment consist of the following:
4. It can be dysfunctional to the organization to utilize inferior internal sources only
because they are there, when excellent candidates are available on the outside.
5. It may generate infighting among the rival candidates for promotion.
METHODS OF INTERNAL RECRUITMENT

There are several methods of internal recruitment.


1. Computerized career progression system
2. Supervisor recommendations
3. Job posting
4. Career development systems
The computerized career progression system (CCPS) is one
that stores extensive amounts of information about
employees of a company. It is a useful means of recruiting
people currently employed by the organization. The system's
computer file contains information on employees such as job
history, education, strengths and weaknesses, leadership
development needs, developmental needs, training, and
special skills.
SUPERVISOR RECOMMENDATIONS

Supervisor recommendations are another method of internal


recruitment. When a supervisor needs to fill a certain
vacancy in his unit, he is in the best position to identify the
person who fits the job. He can be asked to nominate
internal candidates. Most likely, the supervisor will nominate
those whose capabilities are well-known to him.
JOB POSTING

Job posting is a method of internal recruitment in


which a job vacancy notice is posted and all
qualified employees may bid. The notice describes
the job, the salary, work schedule, and necessary
qualifications. The most qualified applicants are
chosen for interview.
CAREER DEVELOPMENT SYSTEM

Career development system constitute another


method of internal recruitment. Under this method,
the organization places "fast-track" or high-potential
employees on a career path where they are
groomed for certain target jobs.
CAREER DEVELOPMENT SYSTEMS

Career development systems have certain advantages which are as follows:


1. The top performers are more likely to remain with the organization.
2. It helps ensure that someone is always ready to fill a position when it becomes
vacant.
The disadvantages of career development systems are as follows:
1. An employee who is not selected even if he is good may become
disenchanted and leave the organization.
2. The selected employee may become frustrated if the expected promotion
does not materialize because the targeted position never becomes vacant.
EXTERNAL RECRUITMENT.

It is a process of attracting job applicants from outside the organization. It is undertaken


when no suitable candidates are available from within the organization. This recruitment
source tends to bring in "new blood" and fresh ideas to the organization.
Methods of External Recruitment.
1. Employee referrals
2. Applicant-initiated recruitment
3. Help-wanted advertisements
4. Private employment agencies and executive search firms
5. Campus recruiting
EMPLOYEE REFERRALS

Employee referrals is a method of recruitment in which organizations ask their employees to solicit applications from qualified
are: friends and associates.
The advantages of this method:
1. Applicants referred by employees tend to perform better and remain with the organization longer than applicants recruited by
other means.
2. Employees tend to be good recruiters because they know a lot about both the job being filled and the
individual, and can therefore accurately judge the "fit" character to fall under the job requirement.
3. Employees make good recruiters because believing their reputation is on the line, they are encouraged the highest qualified
applicants.
The disadvantage of this method:
is the limited choice offered 10 the organization. Employees will tend to recruit only those they know. Even if some are better
qualified, they cannot be considered unless they are referred to by employees
APPLICANT-INITIATED RECRUITMENT

Applicant-initiated recruitment is a method of external recruitment in which an


organization accepts unsolicited applications or resumes from individuals interested in
working for the organization.
The advantages of this method are:
1. It is both efficient and low cost.
2. The candidates are likely to be highly motivated, since they have taken the time to
learn about the organization.
The disadvantage of this method is:
3. When applications and resumes remain "on file" for some time, applicants may no
longer be available when they are needed.
HELP-WANTED ADVERTISEMENTS

Help-wanted advertisements is a method of external recruitment in which an


organization places an advertisement for the position in the appropriate media such
as newspaper, magazine, and the like.
The advantage of this method
• Is it allows the organization to reach a large audience in a relatively short period of
time.
The disadvantage
• Is that studies found out that people hired through newspaper advertisements
perform their job less efficiently and are absent from work more often than those
hired through other recruiting methods.
PRIVATE EMPLOYMENT AGENCIES &
EXECUTIVE SEARCH FIRMS
• Private employment agencies are those that provide organizations, for
a fee, with clerical, blue collar, technical, and lower level managerial
personnel. Their services are especially useful when many individuals
are expected to apply for a job or when qualified candidates are hard to
find.
• Executive search firms are employment agencies used to recruit
middle and top level managers. These firms can locate successful
executives working elsewhere who are not even actively seeking a new
job.
CAMPUS RECRUITING

Campus recruiting is an external recruiting method in which the


organization's recruiters visit various college and university campuses to
recruit individuals for positions requiring a certain degree.
The advantage of this method:
• Is that it can be used to fill specialized entry-level jobs in such fields as
engineering, finance, accounting, computer science, law, and supervisory
management.
The disadvantage of this method:
• Is that it is costly and time consuming.
SELECTION

After recruitment, the next step in the staffing process is selection. This involves
assessing and choosing among job candidates. The selection process involves the
following steps:
1. Completing the application form;
2. Conducting an interview;
3. Completing any necessary tests;
4. Background investigation;
5. Physical and medical examination;
6. A decision to hire or not.
SOCIALIZATION

In socialization, the new employees are provided with information about


the following:
1. Key organization factors which includes an overview of the
organization, policies and procedures, compensation, benefits, safety
and accident prevention, employee and union relations, physical
facilities, and economic factors; and
2. Department and job-related issues including department functions; job
duties and responsibilities; policies, rules, procedures, and regulations;
the autonomy of the department; and socialization into the work group.
TRAINING AND CAREER PLANNING AND
DEVELOPMENT
After the selection effort, the organization will have to undertake measures that will
ensure that the knowledge, skills, and abilities of employees are at par with the
requirements of their respective jobs. Even if the organization hires only very qualified
individuals, it cannot ensure that all jobs will be staffed by fully competent people.
Nearly all employees require some additional training in order to perform their jobs
optimally.

Training
Training is the process of changing employee behavior, attitudes, or opinions through
some type of guided experience. Training the individual employee occurs not only
initially but anytime improved skills are needed to meet changing job requirements.
There are many ways to conduct training programs and they may be classified as follows:
1. on-the-job training:
2. off-the-job training
• On-the-lob Training.

This training method is conducted while employees perform job-related tasks. The common
forms of on-the-job training are:
1. internships
2. apprenticeships
3. job rotation.
• Internships are opportunities for students to gain real world experience.
They are often offered during summer breaks and may be with or
without payment.

• Apprenticeships involve learning a trade from an experienced worker.


Job rotation provides a broad range of experience in different kinds of
jobs in an organization. It is often used to provide background for future
managers and is sometimes used to try to alleviate worker boredom.
OFF-THE-JOB TRAINING

This type of training deals with work skills in settings away from their ordinary workplace. The various off-the-job training
techniques are:
1. Classroom lectures. These consist of lectures designed to communicate specific interpersonal, technical, or problem-
solving skills.
2. Videos and films. This training method uses various media production to demonstrate specialized skills that are not
easily presented by other training methods.
3. Simulation exercises. This is a training method that occurs by actually performing the work. This may include case
analysis, experiential exercises, role playing, or group decision making.
4. Computer-based training. This is a training method that Computer the work environment by programming a computer to
imitate some of the realities of the job.
5. Vestibule training. This is a training method which is done but conducted away on actual equipment used on the job,
which is actually a simulated from the actual work setting work station.
6. Programmed instruction. This is a training method where training materials are condensed into highly organized, logical
sequences. It may include computer tutorials, interactive video disks, or virtual reality simulations.
CAREER PLANNING AND DEVELOPMENT

Organizations need to grow and develop and this


is possible if the individual workers including
managers are given the opportunity to grow and
develop. Such relationships indicate a need for
individual employee to adopt a positive outlook
on career planning and development.
CAREER STAGE

This terms refers to the district stage that individuals go


through in their career, typically including
establishment, advancement, maintenance,and
retirement.
THE ESTABLISHMENT STAGE

This is one of apprenticeship where the


young employee enters an organization
who may be technically able but often
without an understanding of the
organizations demands and expectations.
THE ADVANCEMENT STAGE

The employee seeks growth and increased


responsibility through the continued
development and utilization of his skills.
This stage calls for the employee to work
as an independent contributor of ideas in
a chosen area.
DURING THE MAINTENANCE STAGE

The employee may experience continued growth of


performance and accomplishment, or he may
encounter career stability. sometimes further change in
employer's is necessary to sustain advancement. such
as:
1. Limited interest in learning new skills
2. Organizational considerations such as a basic lack of
opportunity: and
3. Family consideration that make it difficult to change
jobs or to take additional work fee responsibilities.
CAREER PLATEAU

Is a situation in which , for either organizational or


personal reason, the probability of moving up the
career ladder is low
CAREER PLATEAUS ARE OF THREE
TYPE'S
1. STRUCTURAL
2.CONTENT PLATEU
3.LIFE PLATEAU
THE RETIREMENT STAGE

Is that stage when formal preparation for retirement


is made. The individual learns to accept a reduced
role and less responsibility. Depending on the
individual, this can be either a very positive or a highly
up setting stage of one's career.
PERFORMANCE APPRAISAL

Is a key aspect of performance management. It may


be designed as the process of evaluating the
Performance of employees, sharing that information
with them, and searching for ways to improve their
FUNCTIONS OF PERFORMANCES
performance.
1.to give employee feedback on Performances:
APPRAISAL
2. To identity employee's developmental needs:
3. To make promotion and reward decisions: and
5. To develop information about the organization's
selection and
placement decisions.
CRITERIA FOR PERFORMANCES APPRAISAL

The three most popular sets of criteria a are:


1. Individual task outcomes
2.Behaiviors: and
3. Traits
The traits commonly used as basis for Performance appraisal
include
1. Good attitude
2. Showing confidence
3. Being dependable
4. Looking busy
5. Possessing a wealth of experience
The process of appraisal is a process in an organization whereby
each employee is evaluation to determine how he or she is
Performing.It consist
of the following steps:

1. Establishment of performance standard


2.mutually set measurable goals
3.measure actual Performance
4. Compare actual Performance with standards
5. Discuss the appraisal with the employee
6. If necessary, initiate corrective action
THESE ARE THREE DIFFERENT APPROACHES
WHICH CAN BE USED FOR APPRAISING
EMPLOYEES:

1. Absolute
standards:
2.Relatives
standards: and
3.Objectives.
SAMPLE OF ADJECTIVE RATING SCALE ITEMS
AND FORMAT
The advantage of adjective rating scale
• Is that it is practical and cost little to develop.
The disadvantages:
1. it does not clearly indicate what a person must do to achieve a given
rating.
2. It does not provide a good mechanism for providing specific,
nonthreatening feedback. 3. Accurate ratings are not likely to be
achieved because the points on the rating scale are not clearly
defined.
THE FORCED-CHOICE APPRAISAL

The forced-choice appraisal is a type of performance specific


appraisal in which the rater must choose between two or
more specific statements about an employees work behavior.
Forced-choice appraisal can be used by superiors, peers,
subordinates, or a combination of these in evaluating
employees.
FORCED-CHOICE ITEMS

Behaviorally anchored rating scale (BARS) is a rating


instrument comprised of traits anchored by job behaviors.
Appraisers select the behavior that best describes the
worker's performance level. The typical BARS includes seven
or eight traits called "dimension" each anchored by a seven
or nine-point scale.
AN ILLUSTRATION OF A BARS FOR JOB OF
COLLEGE PROFESSOR
The greatest advantage of BARS is its ability to direct and monitor
behavior greatest arbitral anchors let employees knows the bap types of
behavior are expected of them which gives appraisers the opportunity to
provide behaviorally based feedback.
The weakness of BARS is the difficulty of selecting the one behavior on
the scale that is most indicative of the employee's level. Sometimes, an
employee may exhibit behaviors at both ends of the scale, so the rater
would not know which rating to assign.
RELATIVE STANDARDS

This category of appraisal methods compare individuals against other


individuals. The most popular in this category are:

1. Group order ranking


2. Individual ranking
3. Paired comparison
• Group order ranking is a relative standard of performance characterized as placing
employees into a particular classification such as top "one-fifth." This evaluation
method prevents evaluators from inflating their evaluations or from homogenizing
the evaluations. The disadvantage of this method is its inapplicability when the
number of subjects is small.
• The individual ranking method requires the evaluator merely to list the employees in
order from highest to lowest. This method does not show the difference between the
first and second, or between the second and third.
• Paired comparison is an appraisal method whereby subordinates are placed in all
possible pair and the supervisor must choose which of the two in each pair is the
better performer.
OBJECTIVES.

The third approach to appraisal makes use of objectives. This approach, also
known as management by objectives (MBO), is a process of joint goal setting
between a supervisor and subordinate. It is also a process of converting
organizational objectives into individual objectives. MBO consists of four
steps: goal setting, action planning, self-control, and periodic reviews.
In goal setting, the individual objectives are set based on the organization's
overall objectives. These goals are agreed upon and then become the
standards by which the employee's results will be evaluated.
In action planning, realistic plans are developed to attain the objectives.
The advantages of MBO are the following:
1. it improves job performance by monitoring and directing behavior;
2. it is practical and inexpensive; and
3. it fosters better communication between employees and supervisors.
The disadvantages of MBO are the following:
4. it does not specify the behavior required to reach goals;
5. it tends to focus on short-term goals;
6. the successful achievement of MBO goals may be partly a function of factors outside the worker's controls;
7. MBO does not provide a common basis for comparison of performance standards; and 5. it often fails to gain
acceptance.
ERRORS IN PERFORMANCE APPRAISAL

A perfect performance appraisal is an ideal goal and to make it happen, errors


should be prevented from happening. To eliminate the possibility of errors, they
must first be identified.
The following are brief descriptions of errors in performance appraisal.
• Halo Error. This is a rating error that occurs when a rater assigns ratings on the
basis of an overall impression (positive or negative) of the person being rated.
• Leniency Error. This is a rater's tendency to give relatively high ratings to
virtually everyone. The opposite of this is strictness error where the raters tend
to give everyone a low rating. Most often, leniency errors happen when peers
asses one another.
• Central Tendency Error. This occurs when a rater lump everyone
together around the average, or middle, category. The idea is that
there are no very good or very poor performers on the dimension being
rated. As a result, no true performance discrimination is made.
• Recency Error. This is a biased rating that develops by allowing the
individual's most recent behavior to speak for his or her overall
performance on a particular dimension.
• Personal Bias Error. This occurs when a rater allows specific biases,
such as racial, age, and gender, to enter into performance appraisals.
Organizational Incentives consists of reward to motivate people to work. Rewards may be
classified as either:
1. intrinsic or extrinsic
2. financial or nonfinancial
3. performance-based or membership-based

• Intrinsic rewards are those that the worker receives from the job itself, such as pride in
one's work, a feeling of accomplishment, or being part of a team. These rewards are self-
regulated as the worker is not dependent on an outsider, such as the manager, to provide
for them. Managing intrinsic work rewards present the additional challenge of designing a
work setting so that employees can, in effect, reward themselves for a job well done.

• Extrinsic rewards are those that the workers get from the employer, usually money, a
promotion, or benefits, Financial rewards are those that enhance an employee's financial
well-being directly through wages, bonuses, profit sharing, and the like.
• Financial rewards are those that enhance an employee's financial well-being directly through
wages, bonuses, profit sharing, and the like.
• Nonfinancial rewards are indirect enhancement of an employee's financial well-being. This is
done through supportive benefits like pension plans, paid vacations, paid sick leaves, and
purchase discounts.
• Performance-based rewards are those given using performance as basis. These rewards take
the form of commissions, piecework pay plans, incentive systems, group bonuses, or other
forms of merit pay.
• Membership-based rewards refer to those that are given to all employees regardless of
performance. This type includes cost-of- living increases; benefits; and salary increases
attributable to labor- market conditions, seniority or time in rank, credentials such as a college
degree, or future potential such as a new MBA degree from a prestigious university.

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